Pesquisa de Mercado - PMR

Discriminação

O mercado moveleiro na Eslovênia

Número de série 0395/0001/2012

Posto/SECOM Secom Liubliana

Data de preenchimento 28/02/2012

Código NCM

9401.4 - Assentos transformáveis em

camas, exceto material de

acampamento ou de jardim.

9401.5 - Assentos de ratã, vime,

bambu ou matérias semelhantes.

9401.6 - Outros assentos, com

armação de madeira.

9401.7 - Outros assentos, com

armação de metal.

9403.2 - Outros móveis de metal.

9403.6 - Outros móveis de madeira.

9403.7 - Móveis de plásticos.

9403.8 - Móveis de outras matérias,

incluídos o ratã, vime, bambu ou

matérias semelhantes.

Descrição do produto Móveis

Limite de validade 28/02/2014

País importador Eslovênia

Observações

Responsável pela elaboração Jean Ebling

Função/Cargo AA

Telefone +386 1 2442400

Fax +386 1 2442420

E-mail secom.liubliana@itamaraty.gov.br

Nome do arquivo PMR0395000112.pdf

Aprovado por Secretário André Makarenko

2

Market research for furniture in Slovenia

Ministry of Foreign Affairs – MRE Trade and Investment Promotion Office - DPR Trade Information Division - DIC Market research – PMR Date of conclusion: 28.02.2012

3

2. IDENTIFICATION

2.1 Name of the country and indication of the researched area

BASIC DATA

Official name Republic of Slovenia Form of state Democratic parliamentary republic Area 20,273 sq. km Capital Ljubljana Population (2011) 2,051,700 Language Slovenian National currency euro (EUR) GDP Growth (Q2 2011/2010) 0.90% GDP per capita (2010) €17.60 Public debt (2010) 38% GDP Annual inflation (August 2011/2010) 0.90% Basic interest rate (2011) 0.1% monthly; 1.22% yearly Number of enterprises (2010) 180,501 Export of goods (2010) €18,219.200,000

Main destinations of exports Germany, Italy, France, Austria,

Croatia Imports of goods (2010) €19,609,000

Main origins of imports (2010) Germany, Italy, Austria, France,

Croatia Unemployment rate - ILO (July 2011) 8.40% Net monthly earnings (June 2011) €985.98 Gross monthly earnings (June 2011) €1,520.92 Foreigners, residents of Slovenia (2011) 82,746

Embassy in charge of the research: Embassy of the Federative Republic of Brazil in Ljubljana Kongresni trg 3 1000 Ljubljana E-mail: brasemb.liubliana@itamaraty.gov.br Head of the Trade Promotion Sector: Secretary André Makarenko

4

3. PROFILE OF THE DOMESTIC PRODUCTION

Slovenia has enjoyed a very successful economic development in the last decade. Slovenia’s GDP per capita is substantially higher than that of the other new European Union member states and comes in at 91% of the average per capita GDP of the EU-27, expressed in purchasing power parity terms. This puts Slovenia in 16th place in the EU. In recent years the structure of the Slovenian economy has changed in favour of an expanding services sector, while in some manufacturing sectors production has dropped. Concerning the economic structure, the biggest part in added value is represented by services, accounting for almost 65% of GDP. On the other hand, the still relatively high GDP rate is attributed to the manufacturing sector, which including construction accounts for 34%, with the most important being manufacturing at 22%. The share of agriculture as a source of GDP declined to 2% in 2009. The structural change seen in the services indicates the ever stronger importance of knowledge-based services. Services such as telecommunications, business, financial and real-estate have been the fastest growing services market in the last few years in Slovenia. In the manufacturing sector, technology-intensive production activities are becoming more significant, although some labour-intensive branches are still very important for the economy in terms of the number of people they employ. The shares of chemical, electric equipment, machinery and transport industries have risen to 45% of added value in the manufacturing sector. Together with the metal products industry, these activities represent the five most prominent activities of the Slovenian manufacturing sector. Among other less technology-intensive industries, fast growth has been achieved in the last few years in the production of energy fuels, metal production and rubber manufacturing.

3.1 Regional and local distribution of production

In 2010, company Lesnina, d.o.o., had almost a 50% share in the market and has been the leading company in the last 5 years on the Slovenian market. The second most important company is Maros, d.o.o., which had a 3.2% market share in 2010. Other companies, which are presented in the tables, have less than 3% of the market share.

Revenue of the companies in the activity "Retail sales in specialized shops with furniture,

lighting equipment and other assorted household objects" in 2010.

5

Source: BIZI.si, 2010

LESNINA, d.o.o. (items are from TSmedia balance) Year Rank Revenue Revenues activities No. operators in the business Share 2010 1 75,329,571.00 151,882,686.00 203 49.60 2009 1 84,159,407.00 261,913,239.00 202 32.13 2008 1 98,554,606.00 299,534,904.00 195 32.90 2007 1 94,114,917.00 229,260,848.00 196 41.05 2006 1 84,628,939.00 209,538,430.00 181 40.39

OBI d.o.o. (items are from TSmedia balance) Year Rank Revenue Revenues activities No. operators in the business Share 2009 2 56,101,206.00 261,913,239.00 202 21.42 2008 2 54,106,004.00 299,534,904.00 195 18.06 RUTAR MARKETING, d.o.o. (items are from TSmedia balance) Year Rank Revenue Revenues activities No. operators in the business Share 2009 3 42,112,853.00 261,913,239.00 202 16.08 2008 3 52,055,976,00 299,534,904.00 195 17.38 2007 2 47,764,985,00 229,260,848.00 196 20.83 2006 2 37,682,707,00 209,538,430.00 181 17.98 MAROS, d.o.o. (items are from TSmedia balance) Year Rank Revenue Revenues activities No. operators in the business Share

6

2010 2 4,872,964,00 151,882,686.00 203 3.21 2009 4 5,065,421,00 261,913,239.00 202 1.93 2008 4 7,493,706,00 299,534,904.00 195 2.50 2007 3 8,486,915,00 229,260,848.00 196 3.70 2006 3 22,150,501,00 209,538,430.00 181 10.57 Net revenue from sales of domestic products

Source: GVIN, Net revenue from sales, 2010

Yellow line – LESNINA Green line – OBI Red line – RUTAR MARKETING Blue line – MAROS

3.2 Productive structure

Lesnina d.o.o., is a large company which has between 250 and 499 employees. The share capital in 2010 was about €28,705,000. They offer customer advice in their shops or send experts to their customers’ homes to draw out plans for furniture according to the layout of the homes. Lesnina customers can pay by instalments; the company delivers and installs its products within the agreed time at their customers’ homes. Lesnina’s joint stock in 2007 reached €62,729 value added per employee. Their offer includes bedrooms, kitchens and dining rooms, living rooms, a special programme for younger generations (bedrooms for children), a number of smaller pieces of furniture and hallways. They also provide accompanying programmes, which include home textiles, carpets, lamps and other household things, which customers can use in addition to furniture.

7

Lesnina: Forecast and actual share capital of the year from 2009 to 2011

Source: GVIN.COM, 2010

Columns: Forecast and Actual Obi d.o.o., an Austrian company, is also a large company with employees ranging between 250 and 499. The share capital in 2010 was about €57,520.000. The company has been present in Slovenia from 1998 with 7 stores. They offer a large variety of equipment, including furniture. Their services have a 5-year warranty, a price guarantee, gift certificates, delivery of supplies, and "do it yourself" advice tips.

Obi: Forecast and actual share capital of the years from 2009 to 2011

Source: GVIN.COM, 2010

Columns: Forecast and Actual Rutar marketing d.o.o., a large company whose share capital in 2010 was about €12,509,000. They offer customer advice and planning, installation and delivery of furniture, customer credit and custom-made furniture. Their offer includes suites, living rooms, offices, kitchens, nurseries, fine furniture, dining rooms, bedrooms, beds, flooring. Maros d.o.o., is a small company (between 20 and 49 employees). The share capital in 2010 was about €6,835,000. They offer living rooms, kitchens, dining rooms, bedrooms, hallways, children's rooms, home offices and garden furniture. They also represent numerous famous brands. They are renowned for building high quality furniture, a free professional survey and

8

home visit from an architect, expert advice, timely delivery and perfect fitting, information in the field of maintenance and cleaning of the interior design and a warranty. Maros: Forecast and actual share capital of the years from 2009 to 2011

Source: GVIN.COM, 2010

Columns: Forecast and Actual Share capital in four companies which have the biggest market share

Yellow line – LESNINA Green line – OBI Red line – RUTAR MARKETING Blue line – MAROS

3.3 Tax structure

The standard rate of value added tax in Slovenia is 20 per cent. There is a reduced rate of 8.5 per cent for some products and services. Tax is applied on CIF (Cost, Insurance and Freight) + duty. Slovenian Value Added Tax

• The standard rate of VAT in Slovenia is 20%. There is a reduced rate of 8.5%. • Exports from Slovenia are not subject to VAT.

9

• Any business with a turnover in excess of €25,000 in the last 12 months is obligated to register with the VAT authorities.

• The reporting period is generally monthly. For small taxpayers the reporting period is every 3 months.

3.4 Level of domestic product’s standardization, packaging, labelling and design

The furniture industry is actually an assembly industry for the manufacture of their products using different materials. These range from wood and wood-based panels to metal, plastic, textile, leather and glass. There are many different kinds of furniture (chairs, sofas, tables, wardrobes, kitchens, mattresses) for different uses (at home, schools, offices). Today, the EU furniture industry has a high level of production quality in the technological, aesthetic, design and fashion sense and global importance. Small businesses often act as subcontractors to large companies and produce, for example, components and semi-finished products for furniture assembly. Wooden furniture is used in bedrooms, dining rooms, living rooms and other spaces together with plastic and metal furniture these mainstream products are manufactured in the EU (38% of the total production value of furniture). Over the years, and in response to competitive pressure, particularly in international competition, furniture companies have gone through the lengthy process of restructuring and modernization, and the production volume has decreased. After 2005, the volume of production increased slightly, but in 2008 this positive trend reversed and production dropped again. The main factors of competitiveness in the sector include research and innovation, skills and quality, design and value-added, knowledge and experience, together with better access to markets of third countries. Standardization

If the furniture has a specified standard, this represents the value added for furniture. It is the recognition of defined standards of quality, which are described in the eleventh chapter of the Technical standard regulations. Packaging

Packaging is intended to protect the product from damage, to preserve the value of the furniture in storage, transport, display and use. When making a choice of packaging the company has to be aware of environmental protection and safety, and that it will take care of the interests of society as an immediate benefit for consumers and businesses. Materials used for packaging include paper, plastic and metal; it depends on the intended use of the furniture. To protect fragile products the furniture industry uses suitable packaging materials such as bubble wrap. It provides excellent protection against impact, external influences (rain) and is well suited to the individual forms. Furniture is protected against dirt and moisture; bubble wrap is lightweight and resistant to various chemicals. It is easy to use and environmentally

10

safe. Shrink wrap is used to protect goods on wooden pallets. It clings very closely to the goods, and it protects and stabilizes the products. It is suitable for industries where the use of heaters is not allowed. It may also be added as UV protection. Furniture can be packaged also in foil packaging. It provides excellent protection for sensitive areas against mechanical damage. The type of packaging is dependent on the intended use. Do you need to sell, as bulk packaging, transport packaging or returnable packaging? Labelling

The standard classification of activities in the wood industry is one of labelling, using the letter D. Within the manufacturing group, the wood industry sector consists of two, primary and furniture. Furniture: Manufacture of furniture according to the SCA (Standard classification of activities) has a label DN36.1 and consists of:

- DN36.11 Manufacture of chairs and furniture - DN36.12 Manufacture of office and shop furniture except seats - DN36.13 Manufacture of kitchen furniture except seats - DN36.14 Manufacture of other furniture - DN36.15 Manufacture of mattresses

Design

The design of the furniture depends on the supplier's offer. The offer may be traditional furniture, custom-made furniture or modern furniture, with mainly smooth lines. Producers themselves decide what to produce. The design varies from year to year. The design also depends on the intended use of the space and the requirements of the final consumer.

3.5 Distribution of the domestic production

Furniture distribution in Slovenia in most cases is carried out by road transport. Large freight companies often use hired lorries or vans for more local distribution. Rail transport is rarely used, except in cases when it comes to exporting furniture. For exporting to other countries rail transport is normally used. For overseas transport Luka Koper (Port of Koper) is used for loading and unloading of the pallets and distribution in Slovenia and other European countries is managed from there as well (by rail or road).

3.6 Short-term and mid-term forecasts for internal production

The short-term prediction is that the market share will be arranged differently in Slovenia’s various companies than was the case in the past five years. The share of exports has declined in the last few years. Companies will increase their market share through alliances, acquisitions and buyouts. Some companies will no longer be able to produce furniture, so they are looking for other furniture manufacturers. The mid-term forecast is that the companies

11

will integrate beyond national borders, and by creating a better relationship with third country markets.

4. IMPORTS

Trade between Slovenia and Brazil, between 2005 and 2007 markedly increased, reaching €127.5 million. The trade between the two countries has increased by €45.5 million in the first nine months of 2011 compared with the same period in 2010 and has reached €127.3 million. Imports from Brazil between 2002 and 2008 rose steadily and reached a record high in 2008 (€35.9 billion). In 2009, the EU imported €25.7 billion worth of goods from Brazil and last year the imports skyrocketed up to €32.4 billion. In 2007, the EU saw the largest trade deficit with Brazil, namely in the amount of €11.3 billion. Since then, the deficit has been falling steadily and in 2010 it reached €1.1 billion. In the first half of 2011 the value of imports exceeded the value of exports of goods to Brazil by €1.6 billion. Slovenia's trade – Brazil

Year Value (€) Growth rate (%)2005 57,014,000 -0.72006 72,364,000 26.92007 105,896,000 46.32008 76,089,000 -28.12009 64,455,000 -15.32010 63,408,000 -1.62011 (January - April) 34,000,000 123

IMPORTS

Source: Chamber of Commerce and Industry of Slovenia.

Since 2005, the average growth of imports has been around 20% annually. Imports grew in the years from 2005 to 2007. After 2007, the average growth of imports fell by 15%, but the decline has only been 1.6% in the last two years. The table shows that the highest imports from Brazil were in the phase just before the recession, in 2008. Since then, the value of imports has fallen, and the forecast for the next two years shows a slight decline. When the market situation improves the circulation of money will once more be restored, demand will pick up and the increasing volume of imports from Brazil is expected. The main import products in 2011: • Oilcake

12

• Soybeans • Coffee • Hydrogen, rare gases and other non-metals • Kaolin and other kaolin clays • Chemical wood pulp • Corn • Sugar • Used pneumatic tyres • Preparations for oral or dental hygiene Relatively speaking Slovenia also has a substantial trade deficit with Brazil. In 2008 it amounted to almost €48 million, in the first nine months of last year, just over €35 million. Slovenia mainly imports raw materials and agricultural products from Brazil and it mainly exports various electronic equipment, steel products and medicines. This bubble chart shows the country’s top 10 imported products – the size of the circle is proportional to the total import value for each product. The vertical axis shows the trade growth for the product worldwide, while the horizontal axis shows the change in the country’s import of the product. The country’s share of total world imports has increased for products at the bottom right of the chart and it has decreased for the products at the top left.

By joining the EU, Slovenia has adopted a common trade policy, which is directed to free trade without limiting and changing the trade flows. When importing raw materials, intermediate products and components originating from countries outside the EU, companies may exceptionally apply for full or partial exemption from customs duties. To cover all the needs of processing or manufacturing, companies may

13

also grant quotas (limited to the unavailable quantities) reduced rates of duty or the degree of freedom. According to the Rules for exemption from import duties in some special cases, imports from third countries are exempt from import duties. For the area of trade the most interesting examples are of imports of capital goods and equipment, when the customs official decides to transfer its activities from a third country to Slovenia, and the products of sea fishing in the territorial waters of third countries.

Rules governing the exercise of their right to exemption from import duties (Official Gazette of the Republic of Slovenia, 2004). GENERAL PROVISIONS First Article (Introduction)

This policy sets out detailed rules on exercising the right to import duty exemption on the basis of the Council Regulation (EEC). 918/83 of 28 March 1983 on the system of exemptions from customs duties in the Community (OJ L 105, 24 April 1983), including all amendments (hereinafter: Regulation on exemptions) in the area of the law on the implementation of customs regulations of the European Communities (Official Gazette of the Republic. 4.25).

Second article (Decision)

• If the customs authorities grant a request for exemption from import duties and the rules otherwise issue a decision in the form of an endorsement on the customs declaration.

• In cases where an oral declaration is permitted, the customs authority may decide on the exemption in the form of an endorsement on the document submitted to the customs authority in connection with relief from import duties or orally.

• Certificates regarding exemptions in accordance with these Rules issued by the competent authorities are not bound by the customs’ authority in deciding the eligibility for exemption, unless it is a certificate on which these bodies keep official records.

• Certificates issued by the competent authorities in accordance with these Rules can be used in proceedings before the customs authorities if the date of issue has not passed by more than six months.

Third article (Label)

• If this is necessary for the implementation of customs control, the customs authority may require the beneficiary of the exemption to clearly mark the goods with the official label. (a sample is in the third bullet point).

14

• Labels in the preceding paragraph shall not be removed before the deadline specified in the Regulation, whereby an individual is allowed to dispose of the goods.

• The sample labels

Fourth article (Insurance)

If the customs authority requires the provision of security, the amount and form of insurance determined in accordance with the 193rd to 199th Article Council Regulation (EEC). 2913/92 of 12 October 1992 establishing the Community Customs Code (OJ L 302, 19 October 1992, p. 1), including all amendments (hereinafter referred to as the Customs Code) and regulations governing the tax procedure.

GOODS AND OTHER EQUIPMENT IMPORTED ON THE TRANSFER OF ACTIVITIES FROM A THIRD COUNTRY TO THE COMMUNITY Sixteenth article (equipment for the transfer of activities)

• The beneficiary of the 32nd Article of the exemptions wishing to exercise an exemption from import duties need to submit:

o A certificate from the competent authority showing that the activity for the import of furniture or to carry out agricultural activity is registered. If the activity is not registered in the time prior to the import of the equipment, it is necessary to submit a certificate from the competent authority of the beneficiary that qualifies under the regulations that the imported equipment will be used for a specific activity and will be registered within six months from the date of import.

o A list of equipment that has been imported or is planned to be imported later. o Proof of termination of activities in a third country, issued by the competent

authorities in the third countries. o Before starting activities in Slovenia evidence of furniture ownership is

needed.

• A list of the beneficiary’s furniture is needed in duplicate together with the customs declaration. At the customs the authorities shall approve the lists which show who is the rightful claimant of the imported furniture. A copy of the list is attached to the declaration of customs authorities, the other is returned to the beneficiary.

15

5. EXPORTS

As reported from the European Office of Statics, Eurostat, the value of EU exports to Brazil between 2003 and 2008 increased steadily; in 2009 it fell to €21.6 billion and then last year it reached a new peak of €31.3 billion. In the first ten months of 2011 Slovenia exported €30 million worth of goods to Brazil and from Brazil and imported €96 million worth of goods. In Slovenia the value of exports increased by 13.0 % in comparison with the same period in 2010. Slovenia's trade – Brazil

Year Value (€) Growth rate (%)2005 11,800,000 1.32006 18,883,000 602007 21,602,000 14.42008 28,148,000 30.32009 24,286,000 -13.72010 34,448,000 41.82011 (January- April) 13,000,000 25

EXPORTS

Source: Chamber of Commerce and Industry of Slovenia.

According to the Chamber of Commerce and Industry of Slovenia the main export products in 2011 were: • Parts for rotating electrical machines; • Electrical equipment for ignition engines; • Medicines, not for retail sale; • Rods and sections of alloy steel; • Products, plates, cylinders of other alloy steel; • Electrical equipment for bicycles, motor vehicles; • Aluminium powders and flakes; • Electrical resistors; • Mechanical appliances for hazardous liquids; • Hand tools, pneumatic.

6. APPARENT CONSUMPTION

Slovenian imports from Brazil include wood pulp or pulp from other fibrous cellulose material, paper or paperboard waste and scrap.

16

Trade between Slovenia and Brazil 2005 – 2011

in 1000€Year 2005 2006 2007 2008 2009 2010 2011*Exports of goods 11.801 18.883 21.602 28.148 24.286 34.448 18.070Imports of goods 57.014 72.364 105.896 76.089 64.455 63.408 66.099Total 68.815 91.247 127.498 104.237 88.741 97.856 84.169Balance -45.213 -53.481 -84.294 -47.941 -40.169 -28.960 -48.029 * Note: (*) Data refer to the period from January to June. Source: The JAPTI export window, bilateral relations with Slovenia, 2011

Trade between Slovenia and Brazil 2005 - 2011 (graphical presentation)

Source: The JAPTI export window, bilateral relations with Slovenia, 2011 Green column – Exports of goods Red column – Imports of goods

VOLUME OF DOMESTIC CONSUMPTION The indicator shows the changing structure of household expenditure on consumer goods in terms of average annual funds intended for each group of goods and services, enabling the pursuit of changing consumption patterns. Legend: 1 - Transport and communications. 2 - Food and beverages. 3 - Recreation, culture, restaurants and hotels. 4 - Housing, water, electricity, gas and other fuels.

17

5 - Other goods and services. 6 - Clothing and footwear. 7 - Furniture, household equipment and other equipment. 8 - Health and education. 9 - Alcohol, tobacco, narcotics. Structure of consumption expenditure by households

Source: Statistical Office, average allocated assets of households, 2010

After the year 2000, the expenditure on furniture fell and picked up again after 2005 because of the increasing demand for housing in Slovenia, which had to be equipped with furniture. Nevertheless, it should be noted that in most cases the money is not spent for higher-priced furniture, IKEA Austria being a very strong competitor.

18

Total allocated income of households

Source: Statistical Office, average allocated incomes of households, 2010

More than 30% of income is spent on luxury goods, such as non-consumer expenditures, recreation, hotels and travel. Less than 20% of all income is spent on transport. It can be summarized that more than 50% of all funds available are spent on consumer goods that are not vital. Consumers over a period of one year spend less than 20% of their income on furniture. The trend between 2000 and 2008 did not change. Today, in times of crisis, most consumers spend less than if the crisis had not occurred. Nevertheless, consumers intend to spend the same amount on furniture as they did before 2008.

19

All data specified in this table are in per cent (%)

2000 2001 2002 2003 2004 2005 2006 2007 2008Food and Beverage 18,17 17,82 17,37 16,35 15,17 14,46 14,09 13,94 13,81Alcoholic beverages, tobacco, narcotics 1,91 1,83 1,912,02 2,11 2,11 2,16 2,11 2,01Clothing and footwear 8,13 7,99 7,93 7,69 7,32 6,97 6,78 6,87 6,96Housing, water, electricity, gas and other fuels 10,05 10,51 10,43 10,38 10,31 10,55 10,58 10,83 10,92Furniture, household equipment and other maintenance 6,83 6,71 6,35 6,07 6,06 6,32 6,44 6,6 6,58Health 1,65 1,65 1,66 1,58 1,55 1,48 1,51 1,62 1,87Transport 16,05 15,21 14,2 15,17 16,21 16,64 15,92 15,3 14,52Telecommunications 2,85 3,42 3,88 4,08 4,14 4,34 4,44 4,46 4,37Recreation and culture 8,51 8,89 9,51 9,79 9,74 9,46 9,06 8,95 9,18Education 0,82 0,87 0,9 0,84 0,88 0,91 0,92 0,81 0,81Hotels, restaurants and cafes 5,22 5,2 5,43 5,24 4,51 4,06 3,48 3,45 3,58Miscellaneous goods and services 9,75 9,85 9,94 9,78 9,68 9,59 9,66 9,67 9,63Other expenses that are not part of consumer spending 10,07 10,04 10,5 11,02 12,3 13,12 14,95 15,41 15,76 Source: Statistical Office, average allocated assets of households, 2010

7. MAIN SUPPLIERS

The lists of suppliers vary between stores. The providers of furniture in Slovenia choose their suppliers. In Slovenia there are several suppliers from Italy, Croatia and Austria. Data on market shares of individual suppliers are not known since the companies do not disclose their data. Slovene furniture stores offer mostly Slovenian brands such as Gorenje, Svea, Garant, Alvues, Alples, Novoles, Fortrade, Paron, Brest, Tom, Hoja, Izi-Mg, Meblo, Murales, Lagea. Italy

The company/store Harvey Norman has suppliers from Italy, and a supplier for the Italian kitchen manufacturer Veneto Cucine is also present on the Slovenian market. Other more familiar Italian suppliers of furniture in Slovenia are MODULNOVA kitchen, KRISTALIA dining rooms, BIMAX living rooms and bedrooms, RAUMA PLUS sliding doors and built-in closets, sliding doors and invisible doors, VERZELLONI sofas. Furniture is also supplied by the supplier Ariston. Austria

Office furniture comes from Siemens in Austria. They offer a high degree of flexibility in the organization of work spaces and offices. Croatia

The main supplier to Slovenia is Fortrade Company, which supplies furniture from companies Bor d.d., a company that produces dining room furniture, Brastovec, well respected furniture manufacturer using Slavonian oak, Oriolik, a manufacturer of upholstered furniture and Spin Valis, a massive producer of leather armchairs.

20

The Fortrade Company is the exclusive agent for major furniture manufacturers around the world including producers from Croatia, Bosnia and Herzegovina, Serbia, Italy, France, Germany, Poland, Czech Republic, China, Malaysia and Vietnam. The furniture they supply is found in all bigger furniture shops in Slovenia including over 100 furniture showrooms.

8. THE RELEVANT FACTOR INFLUENCING IMPORTS

8.1 Market trends in each one of the main supplying countries

Italy

Italian furniture manufacturers have small production units. In its activities the production companies focus on one product. Higher value added products are achieved through the good and world-renowned Italian design, with high quality manufacturing. They are also known for being able to quickly adapt to new market trends. Italian market trends in the furniture industry are primarily concerned with quality, aesthetic functionality and adaptability to client's wishes. Germany

Germany has moved its production to China due to cheaper labour costs but Germany still retains the main activity such as management, development, research and commerce. Germany will continue with high quality furniture production and small batch and individual furniture. They tend to stay in line with the demands of modern trends in the furniture business. They also produce kitchens, where form and function of classical furniture find a place in a modern and technologically sophisticated design. Croatia

Croatia has similar trends to Slovenia. Croatian furniture production and consumption are broken down by product: office furniture, kitchen furniture, seating, upholstered furniture, other furniture. Croatian furniture exports and imports are broken down by country and product (office furniture, kitchen furniture, upholstered furniture, non-upholstered seats, bedroom furniture, and parts of furniture). The wood and forestry industry is also considered: production, imports, exports and consumption data are provided for the main semi-finished wood products (sawn wood; wood-based panels). Exports and imports of woodworking machinery are also included. Products covered include: office furniture, household furniture, kitchen furniture, upholstered furniture, non-upholstered seats, living room furniture, dining room furniture, bedroom furniture, parts of seats, and parts of furniture, sawn wood, wood-based panels, and woodworking machinery.

8.2 Special aid programmes/allowances/subsidies aimed at promoting exports in the main supplying countries

The EU uses a regional approach to development assistance associated with foreign direct investment (hereafter FDI). The Programme of European Community Investment Partners, which was established on a pilot basis in 1988 and extended in 1992, was further enhanced in

21

1995 to provide financial assistance to increase FDI in Latin America, Asia and the Mediterranean. This programme helps to finance all project phases including support for the preliminary identification of interested companies, interest-free loans for the analysis establishment of joint ventures, co-investment, interest-free loans, expenditure on human resources and technical development. This programme provides assistance to small and medium-sized enterprises while large multinational companies must bid to obtain access to these funds. Since 1995 the Phare Programme for Joint Operations has also been active. The European Investment Bank financiers are committed to (loans, grants, risk capital) FDI projects in developing countries from Africa, the Caribbean and the Mediterranean. Programmes from developed countries promote foreign direct investment and try to install programmes of assistance to developing countries but also to assist and encourage their multinational companies to invest in these countries. The programmes are based on two principles:

- FDI abroad will positively affect the economic development of the investor country and recipient countries.

- Without incentives, there would not be investments on less attractive countries.

8.3 Country’s local structure/policy for the promotion of imports (lines of credit, subsidies)

Imports by statistical regions in Slovenia

Statistična regija 2000 20003 2005 2007 2009 2010Osrednjeslovenska 40.6% 41.7% 42.5% 42.8% 46.2% 44.8%Podravska 9.6% 11.0% 10.4% 10.1% 8.8% 9.3%Jugovzhodna Slovenija 11.4% 9.7% 10.6% 8.8% 9.6% 9.3%Savinjska 9.9% 9.7% 8.7% 8.6% 8.1% 8.4%Gorenjska 8.1% 9.3% 9.0% 9.3% 7.4% 8.1%Obalno-kraška 5.6% 5.1% 5.9% 7.1% 7.4% 7.1%Goriška 4.4% 4.0% 4.0% 4.5% 4.1% 4.4%Pomurska 3.1% 2.4% 2.3% 2.4% 2.8% 2.6%Koroška 3.5% 3.6% 3.4% 3.0% 2.1% 2.4%Spodnjeposavska 2.1% 1.7% 1.3% 1.4% 1.5% 1.6%Notranjsko-kraška 1.2% 1.4% 1.4% 1.5% 1.3% 1.5%Zasavska 0.6% 0.5% 0.6% 0.5% 0.5% 0.4%

Source: Eurostat, http://www.stat.si/doc/pub/Blagovna_%20menjava.pdf, 2011

Advance

Advance is a financing instrument of international trade where the exporter pays the contract obligations to the seller/importer before they have delivered the promised goods or in the last

22

resort to settle its obligations before the production of goods even starts. The brand equivalent is settled in full, partially or the agreed amount is deposited at a bank. Payment of Goods to Open Book Account

An Open Book Account is a classic in the form of short-term business financing, where the exporter assumes the entire risk or financing from the moment the goods are paid for. This form of international trade financing is nowadays mainly used only in the relations of the parent company to subsidiaries, affiliates or warrant agents. This form applies only if: 1. the seller trusts the buyer, 2. when their cooperation is strong and long-term, 3. when the buyer has a high credit rating, 4. when the buyer's country has no high country risk. It is especially important for the seller to check the buyer’s creditworthiness and other risk indicators before signing the contract. However, there may appear certain problems. It is much more difficult to check the creditworthiness of a foreign buyer compared to a home buyer, because there is only a limited database. Banks do not assume any risk with advance and pay on account payments. The bank’s task is only the transfer of funds from the importer to the exporter's account. Bill

Bill of exchange is the legal content and form of the value written document that contains a one-sided abstract promise of the issuer to pay the amount of money under the provisions of the bill law to the person that is on the bill labelled as creditor or remittee. Experience confirms that the business export transactions on credit bills are usually formulated as a bill of their own order in which the exporter is emerging as a drawer and at the same time as remittee. In the business of importing, where the importer is emerging as a major debtor, it is normally about promissory notes or bills of exchange on their own. The importer or buyer will be deciding on this type of financial instrument primarily due to the deferred payment of the purchase price. Short-term credit

Credits belong to the classical forms of export financing. With short-term loans we usually use credits of commercial banks. For financing long-term export transactions we make use of specialized banks or credit agencies for financing. In the event that the client has an opened account in a foreign currency, it may also be granted

23

credit in the foreign currency, where the client avoids the risk of changes in the exchange rate, but only when it comes to executing payments abroad (the current legislation in the RS). Supplier Credit

Supplier Credit is an arrangement where the supplier (manufacturer) accepts installments of the contract amount by the buyer. The purchase agreement and financial agreement are covered by a single contract. By signing the contract at the importer´s (buyer) request , the importer's bank will issue a guarantee or backing (bill of exchange guarantee). The exporter has three options: 1. claims are held recorded in their books until maturity, 2. after shippin the goods, sells or discounts the debt instruments, 3. asks the bank to grant a credit based on the issued claims, guaranteed by the importers bank. The seller will decide on having the first option in the event that he will not only be interested in selling the goods, but would also like to invest at the same time. In practice, this type of credit is used to sell the equipment in several separate consignments of relatively small value. Direct contact between seller and buyer, and the use of simple financial instruments enable the rapid completion of the contract. Buyer Credit

Buyer Credit is a loan agreement between the lender and buyer or borrower in the country of the importer to whom the importer (buyer) is connected. In this form of credit, two separate agreements are concluded, sales and financing contracts. The sales contract is limited strictly to the delivery of goods and services and the task is entered into between the buyer and the seller. The financial contract is signed by the financial institutions and the buyer or buyer's bank. In the event that the financial arrangements are made directly with the buyer, the buyer's bank has to issue a security guarantee. A bank guarantee

A Bank Guarantee is a written legal transaction through which the bank takes on an obligation to guarantee against the recipient of the guarantee(beneficiary) , that his/her obligations will be settled, which a third party at maturity of the obligations will not fulfil, only if the conditions set out under warranty are met. . The bank guarantee is a form of guarantee for precise risks. This guarantee is realized, if the principal debtor fails to fulfill its obligations. It is a probability obligation that only becomes effective if the principal debtor fails to comply. Warranties vary in how the publishers guarantee the payment obligations 1. guarantee, 2. bank guarantee payable on first demand, 3. Stand-by Letter of Credit,

24

4. Bill of exchange and bills guarantee. A guarantee is a binding one-sided contract, where the warrantor (a bank) takes a commitment for a third party, in the case, when the third party does not fulfill its obligations. Here the guarantor (bank), in contrast to guarantees, has the chance to object to the underlying transaction. Precisely because of these properties guarantees are a rarity in international business. The guarantee is a written commitment by the bank to pay a certain amount of money in case the debtor does not settle its obligations to the creditor under certain conditions, or the first call. A letter of credit serves as a payment instrument for bought goods; the bank guarantee serves as a insurance instrument for damage compensation.

8.4 Commercial agreements

Trade agreements - these are the agreements on customs and trade policies with third countries, including Brazil, or with international trade organizations. Belonging to this category is the agreement establishing the World Trade Organization (WTO). The Official Journal of the European Communities has assembled a FRAMEWORK AGREEMENT on cooperation between the European Economic Community and the Federative Republic of Brazil. Article 1: Consideration of MFN (Most Favoured Nation)

The Parties shall grant each other treatment of trade in accordance with the provisions of the General Agreement on tariffs and trade. Article 2: Trade Cooperation

1. The Parties undertake to promote the development and diversification of their trade at the highest possible level in accordance with their economic situation. 2. To this end, the Parties agree to study ways and means of overcoming trade barriers, tariff and quasi-tariff barriers, taking into account the work undertaken in this field by international organizations. 3. Parties, in accordance with its legislation, implement policies, whose objectives are: a) Granting each other the widest facilities for commercial transactions; b) Cooperation at the bilateral and multilateral level in solving problems of common interest including problems relating to goods and semi-finished and finished products; c) Consideration of their needs and interests related to access to the resources and further processing;

25

d) Integration of economic counsellors in the two regions with the aim to diversify and expand the existing trade flows; e) Investigating and recommending measures to promote trade, which is likely to encourage the growth of imports and exports. Article 3: Economic Cooperation

1. Parties taking into account their mutual interests and their long-term economic goals foster economic cooperation in all relevant areas. Cooperation is particularly directed to: - Promoting development and prosperity of their industry, - Opening up new sources of supply and new markets, - Promoting scientific and technological progress, - Contributing to the development of their economies and living standards. 2. To achieve these objectives, the Parties shall, by appropriate means among other things, seek to facilitate and promote: a) Closer and harmonious cooperation between their respective industries, mainly in the form of joint ventures; b) Greater involvement of their operators in the industrial development with other parties for mutual benefit, c) Scientific and technical cooperation: d) Cooperation in the field of energy; e) Cooperation in the agricultural sector; f) Creating favourable conditions for the expansion of investment on terms favourable to both parties; g) Cooperation in third countries. 3. The Parties shall as appropriate encourage the regular exchange of information relating to trade and economic cooperation. 4. Without prejudice to the relevant provisions agreement establishing the European Community, this Agreement and any action adopted pursuant thereto, no way affect the powers of the Member States of the Community to undertake bilateral activities, the Federative Republic of Brazil in the field of economic cooperation and, where appropriate, conclude new agreements on economic cooperation with the Federative Republic of Brazil. Article 4: Joint Cooperation Committee

1. A Joint Cooperation Committee is composed of representatives of the Community and the Federative Republic of Brazil. It meets once a year. By convention, a special meeting may be convened.

2. Its remit is to promote and monitor various commercial and economic cooperation envisaged between the Community and Brazil. The Joint Committee shall take place at an appropriate level to facilitate the implementation of this Agreement and accelerate the achievement of its overall objectives.

26

8.5 Logistics (ports, airports, railways, roads and main distances between them and local distribution centres)

The Port of Koper is the main and only port in Slovenia. The Port of Koper is a multipurpose port equipped and trained for handling and storage of all types of goods. The basic port activity is performed at specialized terminals that are technically and organizationally equipped to handle and store individual commodity groups. They also have a special terminal for timber and timber intermediate products. Under the large closed warehouse timber is protected from rainfall. Favourable climatic conditions create ideal conditions for natural drying, thereby raising the quality of the wood. In addition to timber storage Luka Koper offers additional services, such as:

- wood painting kits, - protection of wood against mould and pests, - loading and emptying of containers.

Marine transport links Regular shipping links from Koper by the world's largest cruise lines are directed to all continents. Compared to the northern ports the shipping route from Koper to the countries of the Mediterranean and all those that lie before the Suez Canal, is shortened by more than 2,000 nautical miles. List of some shipping companies that are present in the Port of Koper: SHIPPING AGENT ACK Shipping Co. Malta Adria Cargo Koper d.o.o. Bonyad shipping Line Transagent d.o.o. Carwil Line Transagent d.o.o. China Shipping Container Line (CSCL) Jadranshipping d.o.o. CMA CGM CMA CGM pomorska agencija d.o.o. CNAN-GROUP Spa. Alger Globus d.o.o. COSCO Adria Cargo Koper d.o.o. Daewoo Logistic Fersped d.d. Egyptian Navigation Company Transmar d.o.o. Equadorian Lines Centralog Koper Eukor Car Carriers Seoul Interagent d.o.o. Evergreen Marine Corporation Tradeways d.o.o., Koper Global Shipping Savica d.o.o. Grimaldi group Agemar Sarl H/J Shipping Co Malta Adria Cargo Koper d.o.o. Hanjin Shipping Sea Gull d.o.o. Hapag Lloyd AG Jadroagent Ljubljana Hatsu Marine Limited Tradeways d.o.o., Koper HDSL Adria Cargo Koper d.o.o. Hoegh Autoliners Interagent d.o.o. HUAL Interagent d.o.o.

27

Hyundai Merchant Marine Adria Container Koper d.o.o. Italy Marittima Tradeways d.o.o., Koper K-line Centralog Koper Shipping and maritim Koper Euroshipping d.o.o. M.N.L. Ro-Ro services Transagent d.o.o. Maersk Line Maersk Adria Ljubljana Mediterranean Shipping Company S.A. (MSC) MSC Koper d.o.o. Metz Container Lines Beirut Adria Cargo Koper d.o.o. Mitsui OSK Lines Multishipping d.o.o. Neptune Lines Interagent d.o.o. Nissan Motor Car Carrier Tokyo Interagent d.o.o. Norasia Container Lines Interagent d.o.o. NYK Line n-logistika Koper, d.o.o./Transagent

Koper, d.o.o. Raphael Shipping S.r.l. Savica d.o.o. RMT Meridiana d.o.o. Safmarine Container Lines Safmarine / Maersk Adria d.o.o. Sea Consortium / X-press container lines Fersped d.d. Sermar Line Meridiana Koper STX Pan Ocean Shipping Co. Interagent d.o.o. UASC Kuwait UAA Koper / Interliner Agencies UFS - United Feeder Services Limassol Meridiana Koper Wallenius Lines Transagent Koper, d.o.o. Yang Ming Lines TransOcean Shipping d.o.o. ZIM Integrated Shipping Services Ltd Jadroagent International Koper

The Port of Koper, a joint-stock company, has the status of authorized economic subject (AEO - Authorised Economic Operator). The AEO certificate provides evidence that the free customs zone Port of Koper is a safe area with the lowest level of risk for goods which travel through the Port of Koper. Acknowledgment that the Port of Koper is a trustworthy and safe business partner has been earned because of the efficient safety systems in the port and its consideration of customs regulations and standards. In daily business they enable the customs service appropriate control, because they have a quality IT infrastructure for managing business and transport records. Obtaining the status of AEO has been influenced by the fact that the Port of Koper regularly settles its financial obligations. The condition for the existence and successful development of the port is its good interaction with overseas destinations. The hinterland of Port of Koper is a relatively wealthy area composed of EU countries, an area with great economic potential and emerging economies. The most important business centres (Vienna, Munich, Budapest etc.) are accessible from Koper in less than one day.

28

Road connections

All terminals in the port possess an adequate road infrastructure, which allows direct ship - lorry connections. The progressive realization of the Slovenian national motorway construction programme has contributed to the improvement of road links with the hinterland of the port. From Koper there is a modern motorway to Slovenian bigger towns and cities and other foreign markets:

- A1 motorway towards Ljubljana, - A1 motorway towards Šentilj (Austria) and A2 in the direction of the tunnel

Karavanke (Austria) - Motorway A1 and G1 road towards Dolga vas (Hungary) - A1 and A3 motorway in the direction of Fernetti (Italy) - A1 road and 11 in the direction of Trieste (Italy).

Rail links

All terminals in the Port are equipped with an appropriate infrastructure, which enables direct ship - wagon connections. On average 470 wagons leave or arrive in the Port of Koper every day. Approximately 70% of the goods destined for the port or from the port are transported by rail. For transport containers from the Port of Koper the following regular rail links have been organized:

The direction Relationship/Operator Frequency

SLOVENIA Koper - Ljubljana - Maribor (Adria van) 2-3 per day

GERMANY Koper - Ljubljana - München (Adria van) 2 per day

CZECH REPUBLIC

Koper - Vratimov (Adria van) 3 per week

Koper - other destinations(Metrans) if necessary

HUNGARY Koper - Budapest (Metrans) 7 per week

Koper - Budapest (Adria Kombi) 5 per week

Koper - Szolnok, Budaors – Torokbalint (Navismart)

3 per week

Koper - Budapest (ARGO) 2 per week

SLOVAKIA Koper - Žilina (Adria van) – KIA dedicated max. 6 per week

Koper - Bratislava (Adria Kombi) max. 3 per week

Koper - Dunajska Streda and others destinations (Metrans)

max. 21 per week

SERBIA Koper - Ljubljana - Belgrade (Adria Kombi) max. 2 per day

CROATIA Koper - Zagreb (Adria Kombi) max. 2 per day

AUSTRIA Koper - Graz - Koper (Adria Transport) max. 5 per week

Koper - Graz - Koper (Adria Kombi) single wagon or truck from

29

Maribor onwards

Koper - Villach - Koper (ICA, Adria Kombi)

5 per week (possible single wagon service)

ROMANIA Koper - Arad - Koper (Adria Transport) If necessary

POLAND Koper - Dunaj - Dabrowa Gornicza (Adria Transport/LTE/Baltic Rail)

once per week

BULGARIA Koper - Ljubljana - Sofia (Adria Kombi) once per week

Source: Luka Koper, http://www.luka-kp.si/slo/pristaniski-prirocnik/povezanost-pristanisca,

2011

Adria Kombi and Metrans daily organize single wagon links to destinations in Austria, Slovakia, Czech Republic, Hungary and Serbia and Montenegro. Air transport There are three public international airports in Slovenia: in Ljubljana (central Slovenia) Jože Pučnik Airport (until 2007 it was called Ljubljana Airport), in Maribor (north-east of Slovenia) Edvard Rusjan Airport (until 2008 it was called Maribor Airport) and Portorož Airport in the south-western part of the country. The airports in Slovenia mostly handle international passenger and goods traffic. The international traffic in Ljubljana Airport began in its current location in 1964, followed by Maribor Airport in 1976, and Portorož Airport in 1981. Compared to 1992, the number of arriving aircraft in 2009 increased from 4,748 to 25,524, i.e. by more than five times. A similar trend also applied to the number of airport passengers. The quantity of goods traffic, however, achieved a lower growth in the mentioned period, it only doubled. In comparison with 2008, goods traffic decreased by 31% in 2009 and amounted to 7,600 tonnes, while in comparison with 2007, goods traffic fell by 62%. In the 1992-2009 period the airport goods traffic rose by ten times. Most of the goods traffic activity takes place in Germany, followed by Great Britain, France and the Netherlands. Slovenia’s part in airport goods traffic is the smallest among the EU-27 countries. It should be noted that in line with the methodology of the European Regulation, Eurostat collects data on airport goods traffic without goods in direct transit. Eurostat only takes in consideration the data provided by Ljubljana Jože Pučnik Airport, which meets the criteria of European regulations. Compared to the 3,000 million tonnes handled in maritime transport, the volumes of freight and mail transport by air are obviously low. And even though the volumes are small compared to other forms of transport, the average value of one tonne of goods transported by air is almost always much higher than in the other forms of transport.

30

Airport goods traffic, Slovenia

The data are reported in tonnes.

Source: Statistical Office of the Republic of Slovenia, 2010

8.6 Level of imported product’s standardization, packaging, labelling and design

Products manufactured in EU carry a label “Made in EU”. Products manufactured in third countries carry a label “Made in a Third country”. Industrial goods are not in circulation in the EU internal market without this label. It is the responsibility of the producer, the producer from third countries, a mediator or an importer to put the CE (conformity of Europe) label on the product. With the CE marking, the manufacturer warrants that the product is safe and in accordance with the technical requirements of the European legislation. The documentation about the CE must be submitted in the technical file of the product and kept by the company for 10 years. The document must always be kept on the EU territory which means that it must, if the product was manufactured outside the EU, be kept by an authorized representative. The symbol must always be attached to the product only rarely it can or must be affixed to the packaging of the product. Mandatory CE marking applies to a wide range of products, particularly technical. Although not a prerequisite for quality, European legislation requires a number of products to acquire the certificate of quality ISO 9000 before they can be labelled with CE. The European Parliament legislative resolution from 21st October 2010 (on the proposal of the European Parliament Council that the indication of country of origin for certain products imported from third countries should be mentioned on the product, COM (2005) 0661 - C7-0048/2010 - 2005/0254 (COD)) states:

31

1. The European Union doesn't have harmonized clauses or common practices for labelling the origin of products by members of the Union, except in special cases in the area of agriculture.

2. Today many companies in the Union are already voluntarily indicating the origin of the goods.

3. There is a lack of EU rules and there are differences between the existing systems in Member States regarding the indication of country of origin for certain products. A number of specific products imported from third countries and distributed within the EU market, are not equipped with information on the country of origin or the information is misleading.

4. The results of the general consultation of the Commission with stakeholders (which included industry, importers, consumer associations, trade unions) on the possible creation of an EU regulation on origin marking indicates that the awareness of consumers in the Union about the importance of labelling is at a high level, especially because of safety and social and environmental related concerns.

5. In the Lisbon Agenda, the EU has set itself a target to strengthen the Union's economy, so that, inter alia, it improves the competitiveness of EU industry in the global economy, and the 2020 EU strategy should build on this need to improve competitiveness; for certain categories of consumer goods the fact that they are produced in the EU is connected with a reputation of quality and high production standards and means a competitive advantage.

6. Union rules on origin marking exist to enhance the competitiveness of the Union and the entire economy of the Union and to allow citizens and consumers to make prudent decisions.

7. In many cases there have been health and safety incidents due to products imported into the EU from third countries. A clear indication of origin enables EU citizens to obtain more information and greater control over their choice and should be protected so that consumers do not unknowingly buy products that are of doubtful quality.

8. To ensure the effectiveness of this regulation and its low administrative burden while allowing companies in the Union to have maximum flexibility, the regulations should be aligned with the global systems’ origin marking "made in".

9. The system of origin labelling would enable consumers to identify products with the social, environmental and safety standards normally associated with the country of origin.

10. The origin of the goods should be indicated by the words 'made in' together with the name of the country. The origin of the goods may be made in any official language of the European Union, by the final consumer in the Member State where the goods are placed on the market, which are easily understood or are in English using the words 'made in' and the English name of the country of origin.

32

The communication from the Commission is within the Directive 2001/95/EC of the European Parliament and the Council on general product safety (Text with EEA relevance) [Official Journal C 38, 17.2.2009]. With the implementation of Directive 2001/95/EC the effectiveness of the framework Community product safety has increased. The European system of IP information and warning has led to the withdrawal of a large number of unsafe products from the market. However, some aspects are even better and ensure the full protection of consumers. This report identifies the following priority areas:

- Consumer product safety, particularly in terms of traceability, strengthening the requirements for product identification, manufacturer or distributor.

- Market surveillance in order to achieve a better coordination within the Member States following an exchange of information and good practices (including customs cooperation) and the opening of the RAPEX system for international, regional or national organizations from a third country.

- Standardization by simplifying procedures, concerning certain types of products and assuming compliance with these standards with the general safety requirements.

- Urgent action is to be taken under the early warning system which may be the definitive way to ensure the withdrawal of dangerous products.

- Directive 2001/95/EC covers the safety of consumer services. The Directive was transposed in all Member States.

8.7 Productive structure of the imported product (technology and automation levels, capital and labour force intensity, modernization perspectives)

All companies should have to manufacture using the latest technology, which allows gluing wood panels, or simply wood design. The latest technology, which is consistent with organic standards, consumes less energy. Gross value added per employee can only be increased by products in the higher price range. Production of such products is dependent on automation and computerization. The rate of development of business and industry will continue more than ever to measure the degree of automation and computerization. Companies will be divided into those that have a better knowledge of automation and where most routine work has been automated, and those that haven’t reached this level of development. Most of Slovenian wood processing and furniture making companies are not sufficiently automated and computerized. A high priority in this process is given by Italian and Austrian manufacturers, who have a higher degree of automation than Slovenian companies have. It is difficult to define the degree of automation of imported furniture. The main reason is the lack of funding which renders the small wood processing companies to replace outdated technology equipment with the latest technologies

33

in wood processing and the production of wood products and to introduce modern business information systems. Even though Slovenia has some high technology companies that offer unique products that are often the result of risk development strategies and the process of specialization is focused on niche markets, it tends to import technologically sophisticated products. Foreign companies planning to export to Slovenia should be innovative, development and technology intensive companies producing high-quality and perfectly designed up-market products.

9. IMPORTING COMPANIES

Unfortunately, data about importing companies have not been obtained. The Bureau of Statistics and the Ministry of Finance do not make this information available due to the Slovenian law on the protection of personal data.

10. MARKET CHARACTERISTICS

10.1 Conditioning factors of the demand for domestic and imported products

On inter-organizational markets interpersonal relations play an important role. Relations presented in the purchasing process taking into account relationships between organizations and between organizational buyers and sellers. It involves the interaction between the seller and the buyer. Among them close relationships occur particularly in the field of marketing channels. After that the concept of power, dependency and conflict can appear. Customers work with suppliers to achieve better quality products. Global competition requires establishing and maintaining long-term relationships. Purchasing decisions on inter-organizational markets are affected by the following factors:

- the quality of the purchased products, half-products and materials, - the delivery date, - supplier’s reliability and accuracy, - the price of raw materials, products and other materials, - transport costs, - sales terms and scope of financing.

Important factors include the product and the value added: A customer looks for product’s value based on expectations. The marketing of products is important for producers to know what product the consumer needs and wants. Features in furniture which present added value for consumers are:

- Functional properties of the product (quality, standards, product durability, reliability, reparability). Important for life expectancy of the product.

- Price. A price increase may lead to added customer value but may be a deterrent for buyers. The manufacturer may set a higher price than the competition, but the product

34

is only sold if a buyer can be convinced. If the company reduces the price it should be asked why a price reduction has appeared.

- Appearance and design. In the eyes of a customer the product must be pleasing in appearance, easy to use, easy to install and easy to repair.

- Fashion trend. Some customers always want to have something new or modern. It is important to meet these emotional needs.

- Origin of the product. The place of origin can be an instrument for promoting the sale (it depends on whether people place greater value on local or international products).

- Ecology. Globalization has also brought negative effects; one of them is environmental pollution. Consumers are aware of the negative consequences and are becoming environmentally conscious. Most of those who are interested in environmental-friendly products tend to be the younger generations.

- Brand. A well-known brand leads to repeated purchases, strengthens consumer loyalty, and consumers are more willing to pay more for it, which contributes to the overall positive image of the company.

- Marketing communication. The company communicates with potential consumers through various media. Consumers must be well informed about what benefits the product offers because if no one knows them, no one will show any interest in them.

10.2 Market segmentation and income level

Buyers of furniture can be segmented mainly demographically and may vary by region. If the enterprise carries on its business in several areas, it must pay particular attention to local differences and the preferences and needs of consumers. Typically, the demographic segmentation divides customers by age, income, size of the family, life cycle of family, race, occupation, religion and ethnicity. It is also important to segment the consumers based on the benefits they get from a certain product. The following features represent the segmentation of customers according to the benefits. Quality

Included in this segment are people to whom quality furniture is very important. Before purchasing, they obtain detailed information about the quality of the wood, the individual materials used in the furniture of their selection. If they are dealing with a recognized furniture brand which is verified and has a high value in the eyes of the consumer, the price is not important. What plays an important role is a combination of quality and design and for this the consumers are willing to pay. The income level in this segment is higher than the average wage in Slovenia. The average gross salary in 2009 amounted to €1,477 per month, according to data from the Statistical Office of Republic of Slovenia. Therefore consumers who have a higher monthly income can afford higher-quality furniture.

35

Design

This segment is mainly dominated by the external impression of the furniture. Consumers are focused primarily on a single design, colour, furniture, design and components. To consumers it does not matter if the furniture is made of high quality wood or of a lesser quality, the aesthetic appearance is particularly important. The furniture’s appearance, especially details such as the mechanism for closing the cabinet doors, the number of shelves and the way the furniture is made are important. Consumers are not so sensitive to price. If it suits them and the furniture design and quality is what they are looking for, they are willing to pay more. The consumers in Slovenia are more sensitive to higher-priced furniture in which they don’t see value for money. They are prepared to pay slightly more for design trends, so companies need a good knowledge of customer preferences since the design affects the desire to purchase. The income level in this segment is consistent with the average salary in Slovenia. However, even those who have a higher salary or those with a lower salary may fall into this segment. It all depends on the desired design and how much the consumer is willing to pay for particular furniture. Therefore, the design may be suitable for demanding customers and for those customers who are not prepared to pay a lot of money for furniture. Price

In this segment, customers are very sensitive to price. Design and quality are not so important to them. They are buying furniture because they need it and hope that it will serve them as long as possible. They choose the best furniture for the lowest possible price and the appearance of the furniture is not taken into account. Those with lower incomes are mostly in this segment and buying depends mainly on the purpose of the purchase.

10.3 Consumer preferences

Furniture must be distinguished from other suppliers to create value in the eyes of the consumer. Consumers are looking for useful products with symbolic value. It is therefore important that the furniture companies formulate appropriate elements of corporate identity products that are properly coordinated. The consumer creates a subjective assessment of the product based on the following factors:

- Functional value of the product represents the physical properties and represents a benefit to the individual. It represents the durability, reliability and other functional characteristics.

36

- When it comes to social values there is the influence of reference groups, family, social class and status. The product may reflect cultural or ethnic characteristics and may represent an individual status symbol.

- Emotional value in the presented design originality, design, and type of material that contribute to the negative and positive feelings in the consumer's mind. The aesthetic attitude of people is an important feature when choosing a product.

- Epistemic value represents the investment to individuals who will benefit in the future. - Contingent value is the result of the current combination of circumstances. The

consumer is under the influence of contingency factors and therefore deviates from the planned behaviour. The consumer may decide to purchase on the basis of the opinion of other consumers.

The reasons for the preference of certain properties are not identical for all consumers. The same characteristics of the product for particular groups of consumers are important for several reasons. Individual properties can bring various benefits to different consumers. Or more than one benefit to the individual consumer. The current trend among consumers in Slovenia is to buy furniture by Slovene designers and companies. In Slovenia there are some excellent producers, which can boast of quality and at an affordable price. Today, given the financial situation, people choose the best possible combination. Young people or young couples, usually choose less expensive furniture that has a nice aesthetic look. Depending on the purpose, this furniture also attracts those who have to furnish an apartment for students (it has to be noted that in the capital Ljubljana there are numerous student apartments offered by owners who have a second housing property). Those with families or older consumers, choose furniture that can be used for several years. They are willing to pay more money for quality. No matter who the consumers are, they tend to follow the design trend in particular when they furnish an apartment or a house for the first time.

10.4 Future perspectives and trends in the internal market

The furniture industry will have to adapt to local trends in the future. Slovenians are increasingly buying products from abroad or buying furniture from international suppliers. In Slovenia, as in other countries, there is a noticeable trend of increased wealth of the rich elite and an increased number of people who are living on the social edge. This is changing the social norms and standards. The middle class, which has dominated for 80 years, is disappearing. According to these trends the offer of consumer goods will have to be adjusted. We are facing an increasing number of people living on the social edge who spend money only on essential items and purchasing furniture is not among them. This segment of the population, which is very unlikely to decline in the future, buys cheap goods at sales or sales promotions and at discount stores. On the other hand, the new classes of wealthy individuals who can be identified with the more expensive brands choose higher price ranges and recognized brands.

37

Nowadays declining birth rates and an aging population can be seen throughout Europe. Europe is faced with immigrants from less developed countries and the older population is more affluent than the younger generation. This results in spending the bulk of the income on consumption rather than savings. The furniture industry should make a unique production shift to smaller quantities, custom-made products taking into account the wishes of the consumer. Economic factors are mainly affecting the purchasing power of end users. The growing purchasing power is reflected in a larger number of purchases of higher-end goods and durable goods, which is characterized by a higher standard of living. With the increase in purchasing power part of the income is diverted to savings, which is an essential generator of future demand. We still know the difference between the central, more developed parts of Slovenia, and the peripheral regions, which have a lower purchasing power and thus a lower standard.

11. MARKET ACCESS

11.1 The general tariff system for imported products

Customs’ regulations of the EU are applied to the importing and exporting of goods from or to third countries. The key EU acts regulating this area are: - Community Customs Code and related enforcement regulations, - EEC regulations on the System of Customs Preferences, and - Regulation on Tariffs and Statistical Nomenclature, and the regulation on Common Customs Tariff. For the areas of customs regulations not regulated by the EU's legislation, Slovenia has adopted the Act Implementing the Customs Regulations of the European Community. These areas are, inter alia: - The authorization to issue permits for a simplified procedure of proving the origin of goods in customs’ procedures, - Customs’ control of non-community wares, - The types of customs’ declarations that may be required, and - Recording, reporting and charging of customs duty. In foreign trade with Slovenia, the measures and potentials restrictions stipulated by the EU law need to be taken into account with the help of the TARIC.

11.2 Applicable tariff system for Brazilian products

CN - COMBINED NOMENCLATURE Seats:

38

Code Description Third country duty

Tariff preference Non preferential tariff quota

-9401 40 -Seats other than garden seats or camping equipment, convertible into beds/Seats of cane, osier, bamboo or similar materials

0.0% 0.0% - SPGL /

--9401 51 --Of bamboo or rattan 5.6% 0.0% - SPGL /

--9401 59 --Other 5.6% 0.0% - SPGL /

-Other seats, with wooden frames

--9401 61 --Upholstered 0.0% 0.0% - SPGL /

--9401 69 --Other 0.0% 0.0% - SPGL /

-Other seats, with metal frames

--9401 71 --Upholstered 0.0% 0.0% - SPGL /

--9401 79 --Other 0.0% 0.0% - SPGL /

-9401 80 -Other seats 0.0% 0.0% - SPGL /

Source: Custom Office of Republic of Slovenia: TARIC Imports/Exports Tables: Code Description Third country

duty Tariff preference Non preferential

tariff quota

---9403 20 80 90 ---Other metal furniture 0.0% 0.0% - SPGL /

--9403 60 90 00 --Other wooden furniture 0.0% 0.0% - SPGL /

--9403 70 00 90 --Other furniture of plastics 0.0% 0.0% - SPGL /

-Furniture of other materials, including cane, osier, bamboo or similar materials

--9403 81 --Of bamboo or rattan

---9403 81 00 10 ---Hand-made 5.6% 0.0% - SPGL HANDY

---9403 81 00 90 ---Other 5.6% 0.0% - SPGL /

--9403 89 --Other

---9403 89 00 10 ---Hand-made 5.6% 0.0% - SPGL HANDY

---9403 89 00 90 ---Other 5.6% 0.0% - SPGL /

Source: Customs Office of Republic of Slovenia: TARIC Imports/Exports The term ‘third country’ is used in the Treaties, where it means a country that is not a member of the Union. This meaning is derived from ‘third country’ in the sense of one not country not being a party to an agreement between two other countries. Even more broadly , the term is used to denote a country other than two specific countries referred to, e.g. in the context of trade relations. This ambiguity is also compounded by the fact that the term is often incorrectly interpreted to mean ‘third-world country’. TARIFF PREFERENCE

39

Under derogations from the rules of the multilateral trading system, developed countries are permitted to grant tariff preferences to developing economies in a non-reciprocal manner (via the Generalized System of Preferences or on a categorical, regional or bilateral basis). In some cases, developing countries have come to rely on market access advantages associated with these preferences. While multilateral tariff liberalization has the potential to yield broad welfare gains for the global economy, in some cases the associated erosion of preference margins may result in hardships for preference-reliant countries. Tariff preferences can expand market access for beneficiary countries. Indeed, some developing countries have come to rely on such preferential access. Consequently, some World Trade Organization member countries have raised concerns about adjustment costs associated with possible reductions in preference margins that might arise as a consequence of multilateral tariff liberalization under the current Doha Development Agenda negotiations. Recent OECD research indicates that vulnerability to preference erosion does occur, but it is less frequent than a quick glance at the aggregate preferential trade flows might suggest. A number of reasons can account for the limited dependence of most developing countries on preferential tariff schemes. First, substantial shares of imports from developing countries enter preference-giving countries via duty-free or low MFN tariff rates. Secondly, large shares of the preferential imports enter under a rather limited number of tariff lines. Thirdly, in volume terms imports under preferential programmes are often dominated by a few large developing countries such as Brazil, China, India, Indonesia, Thailand or South Africa, among others that may have better capacity to adjust than less diversified economies. Fourthly, the literature suggests that constraints built into the preferential programmes sometimes limit their utility due to the exclusion of products of particular interest or difficulties faced in satisfying the programme conditions (e.g. rules of origin). SPGL – developing countries; countries benefiting from the Generalized System of Preferences, minus the countries of the SPGA and SPGE groups. Brazil is listed in this group of countries. Countries benefit from the Generalized System of Preferences, minus the countries of the SPGA and SPGE groups. SPGA – least developed countries benefiting from the Generalized System of Preferences for Agricultural products. SPGE – Countries benefiting from the Generalized System of Preferences tariff, but only for agricultural products.

40

11.3 Tax base (CIF, FAS)

CIF - Cost, Insurance and Freight is a very commonly used Incoterm. This is another Incoterm that officially is not supposed to be used for air shipments, but its usage has been seen in both air and ocean shipments. Officially CIF is only to be used for ocean or inland waterway transport. CIF is basically the same as CFR except that it includes insurance as well as cost and freight.

In CIF, the seller/exporter arranges for the goods to be delivered to the named port of destination. However, unlike CFR, the seller’s risks do not end until the moment the goods have passed the ship’s rail at the named port of destination. The seller is responsible for all costs until the goods have been unloaded at the named port of destination. In this case, the named port of destination is domestic to the buyer, meaning that the named port must be a port in the buyer’s country.

Under CIF terms, the seller’s risks end the moment the goods pass the ship’s rail at the named port of destination, but the seller is responsible for all costs up to the named port of destination:

Seller’s Responsibilities: - Produces the goods and commercial documents as required by the sales contract. - Arranges for export clearance and all export formalities. - Arranges and pays for all costs for the transportation of the goods up to the named port of destination. - Assumes all risk to the goods (loss or damage) only up to the point they have been transported to the port of destination and ends the moment the goods pass the ship’s rail at the port of destination. - The seller must advise the buyer of the location and time that the goods have been delivered onto the named vessel. - The seller has to provide the buyer with transport documents that will allow the buyer to take possession of the goods at the named port of destination.

Buyer’s Responsibilities: - The buyer must pay for the goods as per the sale contract. - The buyer must obtain all commercial documentation, licenses, and authorizations required for the import and arrange for import clearance and formalities at its own risk and cost. - The buyer shall take delivery of the goods after they have been delivered by the seller to the named port of destination. - The buyer must assume all risks for the goods from the time the goods pass the ship’s rail at the port of destination to delivery into the buyer’s warehouse or other specified location. SPECIAL NOTE: While the seller is obligated to insure the goods and is legally responsible

41

for the goods up to the port of destination, the buyer may have a vested interest in the goods during the voyage. It may be a wise decision for the buyer to purchase additional insurance coverage in the case of loss. - The buyer shall pay for all the costs of transportation, import customs formalities and duty fees, and all other formalities and the charges related to the transportation of the shipment from the time the goods have been delivered to the named port of destination. - The buyer shall accept the seller’s transport documents provided they conform to the sales contract and shall allow the buyer to take possession of the goods after their arrival at the named port of destination.

This interpretation is provided as a guide only.

Incoterms are published by the International Chamber of Commerce and are available on their website and official publication Incoterms® 2000. For a complete and official overview please refer to the ICC’s publication.

Cost distribution between sellers (S) and buyers (B)

FOB CIF/CFR FOTLoading at sellers' premises S S S

Inland transport (from the named place) S S B

Trade documentation at origin S S S

Customs clearance at origin S S S

Export charges S S S

Loading terminal handling charges (THC) S S B

Ocean freight B S B

Unloading terminal handling charges (THC) B B B Source: International Trade Centre

FOB - free on board: The seller's obligations are fulfilled when the goods have passed over the ship's rail at the port of shipment. For contracts FOT (free on truck) and FOR (free on rail) this occurs when the goods have passed over the truck's tailgate or the railcar's loading gate. Under present-day FOB contracts it is nearly always the buyer who arranges the contract of carriage and who is liable for all costs and risk from that point onwards. Nevertheless the ECC clearly states that an FOB contract is in fact to be considered as an ill-defined cost and freight contract, with the freight being for the account of the buyers. The exporter's contractual responsibility ends only when the goods cross the ship's rail. But the ECC also states that the buyer is responsible for insuring the goods from the time the goods leave the ultimate warehouse or other place of storage at the port of shipment. This is important because it is increasingly difficult to establish the precise time a container leaves the stack on the quayside and is transferred across the ship's rail. Under GCA contracts the risk of loss transfers upon crossing the ship's rail and exporters must insure accordingly.

42

11.4 System of preference (GSP, LAIA)

The Generalized System of Preferences, or GSP, is a formal system of exemption from the more general rules of the World Trade Organization (WTO), (formerly, the General Agreement on Tariffs and Trade or GATT). Specifically, it's a system of exemption from the most favoured nation principle (MFN) that obliges WTO member countries to treat the imports of all other WTO member countries no worse than they treat the imports of their "most favoured" trading partner. In essence, MFN requires WTO member countries to treat imports coming from all other WTO member countries equally, that is, by imposing equal tariffs on them, etc. From the perspective of developing countries as a group, GSP programmes have been a mixed success. On one hand, most rich countries have complied with the obligation to generalize their programmes by offering benefits to a large swathe of beneficiaries, generally including nearly every non-OECD member state. Certainly, every GSP programme imposes some restrictions. The United States, for instance, has excluded countries from GSP coverage for reasons such as being communist (Vietnam), being placed on the U.S. State Department's list of countries that support terrorism (Libya), and failing to respect U.S. intellectual property laws. Criticism has been levelled noting that most GSP programmes are not completely generalized with respect to products, and this is by design. That is, they don't cover products of greatest export interest to low-income developing countries lacking natural resources. In the United States and many other rich countries, domestic producers of "simple" manufactured goods, such as textiles, leather goods, ceramics, glass and steel, have long claimed that they could not compete with large quantities of imports. Thus, such products have been categorically excluded from GSP coverage under the U.S. and many other GSP programmes. Critics assert that these excluded products are precisely the kinds of manufactured goods that most developing countries are able to export, the argument being that developing countries may not be able to efficiently produce things like locomotives or telecommunications satellites, but they can make shirts. Supporters note that even in the face of its limitations, it would not be accurate to conclude that GSP has failed to benefit developing countries, though some concede GSP has benefited developing countries unevenly. Some assert that, for most of its history, GSP has benefited "richer developing" countries - in early years Mexico, Taiwan, Hong Kong, Singapore, and Malaysia, more recently Brazil and India - while providing virtually no assistance to the world's least developed countries, such as Haiti, Nepal, and most countries in sub-Saharan Africa. The U.S., however, has closed some of these gaps through supplemental preference programmes like the African Growth and Opportunity Act and a newer programme for Haiti, and Europe has done the same with everything but Arms.

43

TARIC Conditions:

Measure 122 Non preferential tariff quota

Validity From 01.01.2011 to 31.12.2011

Condition Presentation of a certificate/license/document

Certificate Certificate of authenticity HANDI(A014)

Action Apply the mentioned duty

Certificate It is not enclosed!

Action Measure not applicable

Footnote CD001 - Eligibility to benefit from this tariff quota is subject to the presentation of a certificate, recognized by the competent Community authorities, attesting that the products concerned are hand-made (R!2000/0032 - OJ No L 5).

Footnote TM589 - The following shall be considered hand-made products: (a) Cottage industry products made entirely by hand; (b) Cottage industry products which have the character of products made by hand; (c) Garments or other textile products obtained manually from fabrics woven on looms operated solely by hand or foot and essentially sewn by hand or sewn by sewing-machines operated solely by hand or foot.

Source: Custom Office of Republic of Slovenia: TARIC Conditions

11.5 Restriction regarding imports duties, quotas, etc.

Slovenia has a relatively open trade regime, reflecting a view in officialdom of the importance of trade in overall economic liberalization and competitiveness. As of 1997, the weighted average tariff rate applied to most-favoured nations (MFN) was 10.7 per cent. In addition, Slovenia has concluded a number of new free trade agreements and further liberalization has occurred, notably that related to the Association Agreement with the EU. The effective rate of protection is calculated to be 3 per cent -- down from 36 per cent prior to liberalization. In 1999, Slovenia adopted a temporary change in its trade regime permitting it to reduce its MFN tariff rate in step with its bilateral tariff reduction vis-a-vis the EU. The government intends to make such stepwise reductions a permanent feature, culminating with the wholesale adoption of the EU's Common External Tariff (CXT) upon EU accession. The effect of this measure will be to limit the disadvantages third country (including U.S.) exporters will face selling into the Slovenian market in advance of EU accession, as well as to limit disruption to individual sectors a discontinuous adjustment to the CXT would cause. Customs rates are generally defined by law according to the following categories: 0-5 per cent for raw materials; 5-10 per cent for semi-finished products; 8-15 per cent for equipment; and 15-27 per cent for finished products or consumer goods. Import levies are payable upon the importation of most agricultural and food products. Levies are not charged if the agricultural or food product is exempt from duties pursuant to the Customs Law. These levies are also not payable on imports of products from countries with which Slovenia has signed bilateral trade agreements.

44

Customs Valuation

The primary basis for customs valuation is ad valorum on the transaction value of the goods, i.e. the price paid or the price that is to be paid for the goods to be imported, including all duties and taxes paid outside Slovenia.

Import Licenses

Ninety-eight per cent of imports are free of quantitative restrictions. Import quotas restrict a few categories of goods, and in some sectors permits or licenses restrict importation;

- Textiles and textile products are imported through a quota system; - Import licenses are required from the competent ministry for the import of drugs and

some chemicals, waste products and raw materials, articles of cultural heritage, gold, waste and scrap of precious metals and coins, nuclear reactors and weapons;

- A quality certificate is required for the import of some animals, meat and vegetables, and other food products.

11.6 Sanitary regulations

There are no sanitary regulations.

11.7 Required product’s certification

With certification a company strives to achieve good quality. According to predetermined criteria and rules set up systems of organization, production, control and other factors that allow a maintenance level of quality. In Slovenia there are national standards (SIST), most of which are made pursuant to European (EN) and international standards (ISO). In this way, it accepts national standards that are equivalent to and compatible with foreign standards. The Act on Standardization says that the use of the act is voluntary, except in the cases where its use is defined by regulations. Interpretation of the following abbreviations for the codes of standards:

• SIST – Code for the Slovenian standard from Slovenian Institute of Standards

• EN/CEN/ENV – Code for the European standard from the European Committee for Standardization

The European Committee for Standardization (CEN) develops European Standards and other products covering a vast range of subjects. The various products CEN delivers are listed on the left. Amongst these, the European Standard (EN) is the major deliverable. An EN must be implemented by all CEN National Standardization Bodies, who must also withdraw any conflicting national standards. Besides ENs, the CEN produces other reference documents with a different objective, which can be developed quickly and easily such as a Draft European Standard (prEN), a CEN Workshop Agreement (CWA) which is often used in fast-evolving technologies and the creation of new markets, a Technical Specification (TS) and a Technical Report (TR).

45

A Technical Specification (TS) is a normative document produced and approved by a Technical Committee. CEN/TS can be developed by the CEN Technical Committees as a pre-standard which contains technical requirements for innovative technology, or when various alternatives need to coexist in anticipation of future harmonization that would not gather enough as to allow agreement on a European Standard (EN). A TS does not have the status of an EN but may be adopted as national standard. Moreover there is no standstill, no public enquiry and no weighted vote. A TS must be produced in one of the official CEN languages and its maximum lifetime is reduced to two or three years. A TS may not conflict with an EN. If a conflicting EN is subsequently published, the TS must be withdrawn. A Technical Report (TR) is a document that provides information on the technical content of standardization work. Technical Reports may be prepared when it is considered urgent or advisable to provide additional information to the CEN national members, the European Commission, the EFTA Secretariat or other governmental agencies or outside bodies. The information contained in a TR is different from that which is normally published as a European Standard (EN).

• ISO – International Organization for Standardization

• SIST EN – Slovenian Standard taken from the European Standard

• prSIST EN – Proposal of the Slovenian Standard taken from the European Standard Taken standards (on July 2005) are: SIST EN 1021-1:1995 Furniture - Assessment of the ignitability of upholstered furniture - Part 1: Ignition source: smouldering cigarette (ISO 8191-1:1987, modified) SIST EN 1021-2:1995 Furniture - Assessment of the ignitability of upholstered furniture - Part 2: Ignition source: match flame equivalent (ISO 8191-2:1988, modified) SIST EN 1022:1997 Domestic furniture - Seating - Determination of stability SIST EN 1022:1997/AC: 2001 Domestic furniture - Seating - Determination of stability SIST EN 1023-1:1996 Office furniture - Screens - Part 1: Dimensions SIST EN 1023-2:2001 Office furniture - Screens - Part 2: Mechanical safety requirements SIST EN 1023-3:2001 Office furniture - Screens - Part 3: Test methods SIST EN 1116:1996

46

Kitchen furniture - Coordinating sizes for kitchen furniture and kitchen appliances SIST EN 1129-1:1996 Furniture - Foldaway beds - Safety requirements and testing - Part 1: Safety requirements SIST EN 1129-2:1996 Furniture - Foldaway beds - Safety requirements and testing - Part 2: Test methods SIST EN 1130-1:1996 Furniture - Cribs and cradles for domestic use - Part 1: Safety requirements SIST EN 1130-2:1996 Furniture - Cribs and cradles for domestic use - Part 2: Test methods SIST EN 1153:1996 Kitchen furniture - Safety requirements and test methods for built-in and free standing kitchen cabinets and work tops SIST EN 1153:1996/AC: 2003 Kitchen furniture - Safety requirements and test methods for built-in and free standing kitchen cabinets and work tops SIST EN 12227-1:2001 Playpens for domestic use - Part 1: Safety requirements SIST EN 12227-2:2001 Playpens for domestic use - Part 2: Test methods SIST EN 12720:1997 Furniture - Assessment of surface resistance to cold liquids (ISO 4211:1979 modified) SIST EN 12721:1997 Furniture - Assessment of surface resistance to wet heat (ISO 4211-2:1993 modified) SIST EN 12727:2001 Furniture - Ranked seating - Test methods and requirements for strength and durability SIST EN 131-1:1996 Ladders - Terminology, types, functional sizes SIST EN 131-1:1996/AC: 2001 Ladders - Terms, types, functional sizes SIST EN 131-2:1996 Ladders - Requirements, testing, marking SIST EN 131-2:1996/AC: 2001 Ladders - Requirements, testing, marking SIST EN 13150:2002 Workbenches for laboratories - Dimensions, safety requirements and test methods SIST EN 1334:1996 Domestic furniture - Beds and mattresses - Methods of measurement and recommended tolerances SIST EN 1335-1:2001 Office furniture - Office work chair - Part 1: Dimensions - Determination of dimensions SIST EN 1335-1:2001/AC: 2003 Office furniture - Office work chair - Part 1: Dimensions - Determination of dimensions

47

SIST EN 1335-2:2001 Office furniture - Office work chair - Part 2: Safety requirements SIST EN 1335-3:2001 Office furniture - Office work chair - Part 3: Safety test methods SIST EN 13453-1:2004 Furniture - Bunk beds and high beds for non-domestic use - Part 1: Safety, strength and durability requirements SIST EN 13453-2:2004 Furniture - Bunk beds and high beds for non-domestic use - Part 2: Test methods SIST EN 13721:2004 Furniture - Assessment of the surface reflectance SIST EN 13722:2004 Furniture - Assessment of the surface gloss SIST EN 13761:2003 Office furniture - Visitors chairs SIST EN 14072:2004 Glass in furniture - Test methods SIST EN 14073-2:2004 Office furniture - Storage furniture - Part 2: Safety requirements SIST EN 14073-3:2004 Office furniture - Storage furniture - Part 3: Test methods for the determination of stability and strength of the structure SIST EN 14074:2004 Office furniture - Tables and desks and storage furniture - Test methods for the determination of strength and durability of moving parts SIST EN 14183:2004 Step stools EN14434:2004 NO SIST Writing boards for educational institutions - Ergonomic, technical and safety requirements and their test methods SIST EN 1725:2001 Domestic furniture - Beds and mattresses - Safety requirements and test methods SIST EN 1727:2001 Domestic furniture - Storage furniture - Safety requirements and test methods SIST EN 1728:2002 Domestic furniture - Seating – Test methods for the determination of strength and durability SIST EN 1730:2001 Domestic furniture - Tables - Test methods for determination of strength, durability and stability SIST EN 1957:2001

48

Domestic furniture - Beds and mattresses - Test methods for the determination of functional characteristics SIST EN 527-1:2001 Office furniture - Work tables and desks - Part 1: Dimensions SIST EN 527-1:2001/AC:2003 Office furniture - Work tables and desks - Part 1: Dimensions SIST EN 527-2:2003 Office furniture - Work tables and desks - Part 2: Mechanical safety requirements SIST EN 527-3:2003 Office furniture - Work tables and desks - Part 3: Methods of test for the determination of the stability and the mechanical strength of the structure SIST EN 581-1:1997 Outdoor furniture - Seating and tables for camping, domestic and contract use - Part 1: General safety requirements SIST EN 581-3:2001 Outdoor furniture - Seating and tables for camping, domestic and contract use - Part 3: Mechanical safety requirements and test methods for tables SIST EN 597-1:1995 Furniture - Assessment of the ignitability of mattresses and upholstered bed bases - Part 1: Ignition source: Smouldering cigarette SIST EN 597-2:1995 Furniture - Assessment of the ignitability of mattresses and upholstered bed bases - Part 2: Ignition source: Match flame equivalent SIST EN 716-1:1996 Furniture - Children's cots and folding cots for domestic use - Part 1: Safety requirements SIST EN 716-2:1996 Furniture - Children's cots and folding cots for domestic use - Part 2: Test methods SIST EN 747-1:1996 Furniture - Bunk beds for domestic use - Part 1: Safety requirements SIST EN 747-2:1996 Furniture - Bunk beds for domestic use - Part 2: Test methods SIST ENV 1178-1:1996 Furniture - Children's high chairs for domestic use - Part 1: Safety requirements (ISO 9221-1, modified) SIST ENV 1178-2:1996 Furniture - Children's high chairs for domestic use - Part 2: Test methods (ISO 9221-2, modified) SIST ENV 12520:2001 Domestic furniture - Seating - Mechanical and structural safety requirements SIST ENV 12521:2001 Domestic furniture - Tables - Mechanical and structural safety requirements SIST ENV 13759:2002

49

Domestic furniture – Seating – Test method for the determination of the durability of reclining and/or tilting mechanisms and operating mechanisms for convertible sofa beds SIST ENV 14443:2004 Domestic furniture - Seating - Test methods for the determination of durability of upholstery SIST ENV 1729-1:2002 Furniture – Chairs and tables for educational institutions – Part 1: Functional dimensions SIST ENV 1729-2:2002 Furniture – Chairs and tables for educational institutions – Part 2: Safety requirements and test methods SIST ENV 581-2:2001 Outdoor furniture - Seating and tables for camping, domestic and contract use - Part 2: Mechanical safety requirements and test methods for seating SIST ISO 4211-4:1995 Furniture - Tests for surfaces - Part 4: Assessment of resistance to impact SIST ISO 5970:1996 Furniture - Chairs and tables for educational institutions - Functional sizes Applicable international standards (from November 2004) are: ISO 4211:1979 Furniture - Assessment of surface resistance to cold liquids ISO 4211-2:1993 Furniture - Tests for surfaces - Part 2: Assessment of resistance to wet heat ISO 4211-3:1993 Furniture - Tests for surface finishes - Part 3: Assessment of resistance to dry heat ISO 4211-4:1988 Furniture - Tests for surfaces - Part 4: Assessment of resistance to impact ISO 5970:1979 Furniture - Chairs and tables for educational institutions - Functional sizes ISO 7170:1993 Furniture - Storage units - Determination of strength and durability ISO 7171:1988 Furniture - Storage units - Determination of stability ISO 7172:1988 Furniture - Tables - Determination of stability ISO 7173:1989 Furniture - Chairs and stools - Determination of strength and durability ISO 7174-1:1988 Furniture - Chairs - Determination of stability - Part 1: Upright chairs and stools ISO 7174-2:1992 Furniture - Chairs - Determination of stability - Part 2: Chairs with tilting or reclining mechanisms when fully reclined, and rocking chairs

50

ISO 7175-1:1997 Children's cots and folding cots for domestic use - Part 1: Safety requirements ISO 7175-2:1997 Children's cots and folding cots for domestic use - Part 2: Test methods ISO 8191-1:1987 Furniture - Assessment of the ignitability of upholstered furniture - Part 1: Ignition source: smoldering cigarette ISO 8191-2:1988 Furniture - Assessment of ignitability of upholstered furniture - Part 2: Ignition source: match-flame equivalent ISO 9098-1:1994 Bunk beds for domestic use - Safety requirements and tests - Part 1: Safety requirements ISO 9098-2:1994 Bunk beds for domestic use - Safety requirements and tests - Part 2: Test methods ISO 9221-1:1992 Furniture - Children's high chairs - Part 1: Safety requirements ISO 9221-2:1992 Furniture - Children's high chairs - Part 2: Test methods ISO 10131-1:1997 Foldaway beds - Safety requirements and tests - Part 1: Safety requirements ISO 10131-2:1997 Foldaway beds - Safety requirements and tests - Part 2: Test methods ISO 15717:1998 Kitchen equipment - Safety requirements and test methods for kitchen cabinets and work tops

11.8 Technical standard regulations

The most popular is furniture that is produced from environment-friendly materials and an environmentally less cumbersome process. The special technical standards are in public procurement.

• Wood and materials on the basis of this must come from legal sources. It depends on where companies receive wood. If they have ISO standard 9000 or ISO standard 14000, FSC1 (Forest Stewardship Council) or PEFC2 (Programme for the Endorsement of Forest Certification) certificate or the last in the chain of custody of timber. They probably need a FLEGT3 (Forest Law Enforcement, Governance and trade) permit if the wood is apparent in a country which has signed a voluntary partnership agreement with the EU.

FSC is an independent, non-governmental, non-profit organization established to promote the responsible management of the world’s forests. Established in 1993 as a response to concerns over global deforestation, FSC is a pioneer forum where the global consensus on responsible

51

forest management convenes and through the democratic process effects solutions to the pressures facing the world’s forests and forest-dependent communities. Within this forum, voices from the Global North and South, from organizations big and small, assemble to define environmentally appropriate, socially beneficial and economically viable forest management and identify the tools and resources that will effect positive, lasting change. FSC certification is a voluntary, market-based tool that supports responsible forest management worldwide. FSC certified forest products are verified from the forest of origin through the supply chain. The FSC label ensures that the forest products used are from responsibly harvested and verified sources. The FSC Principles and Criteria (P&C) describe how forests can be managed to meet the social, economic, ecological, cultural and spiritual needs of present and future generations. Developed through a strong, multi-stakeholder process, they include managerial aspects as well as environmental and social requirements. Three core activities support the FSC P&C to be implemented in forests worldwide through FSC certification:

- Standard Setting

At the FSC International Centre, a team of experts facilitate the development, review and improvement of FSC rules and procedures. The FSC standard-setting process is transparent, democratic and inclusive with many opportunities for the interested public to participate. It is this process that has allowed the FSC to become an important and recognized forum where innovative solutions have become possible with the support of all stakeholder groups interested in forestry issues. Code of Good Practice for setting standards FSC standards are set in accordance with the requirements of the ISEAL Code of Good Practice for Setting Social and Environmental Standards. This means that the standards are set on the basis of consultations with the major stakeholders. ISEAL is the global association for social and environmental standards systems. FSC is the only certification scheme in forestry recognized by ISEAL to follow best-practice in standard-setting.

- Accreditation programme

The FSC does not issue certificates itself. The certification process is carried out by independent organizations called certification bodies. Before being able to certify according to FSC standards, certification bodies have to gain FSC accreditation. To do this, certifiers have to comply with an extensive set of rules. The FSC is the only global forest management certification system with an integrated accreditation programme that systematically controls its certification bodies. Compliance with these rules and procedures is verified by the Accreditation Services International (ASI) – the company managing the FSC accreditation programme – through

52

office audits and the witnessing of one trial audit in the field prior to gaining FSC accreditation. One such requirement is that all FSC accredited certification bodies have to be in compliance with the relevant international ISO standard (ISO/IEC Guide 65: 1996 (E)). Every year, ASI controls the continued implementation of FSC rules and procedures through at least office and field audits for each FSC accredited certification body.

- Trademark Assurance

Protecting the FSC trademarks maintains the integrity of the FSC and all those who are truly committed to responsible forest management. The Forest Stewardship Council® takes protection and enforcement of its intellectual property rights very seriously and has developed an extensive trademark protection strategy. Our objectives are to identify to consumers those entities that are infringing our trademark rights and to take legal actions against them. The FSC trademarks offer a guarantee that products come from responsible sources. To maintain FSC's credibility and goodwill, it is essential that the trademarks are used correctly. FSC has a dedicated Trademark Service Unit that provides guidance on how to use the FSC trademarks. Only those who have obtained authorization can use the FSC trademarks and all trademark use must be in compliance with our current trademark standards and guidelines. If you suspect that the FSC label is being misused or infringed, please report this immediately following the procedure below. PEFC is the world's largest forest certification system. Their credible standards seek to transform the way forests are managed globally – and locally - to ensure that all of them can enjoy the environmental, social and economic benefits that forests offer. Certification & Accreditation

Impartial, objective and credible certification is the hallmark of any certification system. PEFC is the only global forest certification system that strictly separates its activities in standards development from certification and accreditation to assure the independence of these processes and to avoid potential conflicts of interest or bias. PEFC uses the internationally-recognized requirements for certification and accreditation defined by the International Standardization Organization (ISO) and the International Accreditation Forum (IAF). Requirements for Certification Bodies and Procedures

Certification of compliance with PEFC-endorsed standards is not carried out by the PEFC itself, but by independent third parties, accredited certification bodies. Certification bodies also perform annual surveillance audits and periodic re-assessment audits to proactively verify that a certified forest owner or company maintains compliance with the PEFC requirements.

53

To ensure independence and impartiality, the PEFC requires certification bodies to be independent from the standards development process and the entity they are certifying. Other requirements include:

- Compliance with ISO/IEC 17021:2006 and/or ISO Guide 65:1996. ISO Guide 65 specifies, among others, that certificates can only be granted after non-compliance has been corrected.

- Technical competence in forest management and its economic, social and environmental impacts and/or in forest-based product procurement and processing, and material flows in different stages of processing and trading.

- Auditors of certification bodies must meet the criteria for quality and environmental management systems auditors as defined in ISO 19011:2002.

It must be accredited by national accreditation bodies. Requirements for Accreditation Bodies

Accreditation serves as a quality-control mechanism to ensure the credibility of the work of certification bodies. Accreditation bodies independently evaluate the work of certification bodies and assess them to demonstrate their competence, impartiality and performance capability. The PEFC requires national accreditation bodies to comply with ISO/IEC 17011:2004 to ensure that they operate in a consistent, comparable and reliable manner worldwide. Accreditation bodies need to be members of the International Accreditation Forum (IAF), the world association of accreditation bodies.

Public Availability of Information

The credibility of any forest certification system depends on the robust implementation of certification requirements. Although the PEFC's safeguard mechanisms follow the best practices developed by the ISO, it is clear that errors cannot be eliminated completely. To minimize risk, the PEFC requires that summaries of certification reports on the auditor’s conformity with the forest management standard be made publicly available.

• Plastic parts with a weight equal to or greater than 50g shall not contain additive materials that may interfere with recycling. The bidder must attach to the offer a certificate of compliance with the requirements of ISO 11469 or confirmation that the goods are eco-labels type I or the technical documentation of sufficient evidence from which it derives, that the requirements are met.

• The coating of wood, plastic or metal parts shall not contain hazardous substances in accordance with Directive no. 1999/45/EC. This is DIRECTIVE 1999/45/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 31 May 1999. Concerning the approximation of the laws, regulations and administrative provisions of the Member States relating to the classification, packaging and labelling of dangerous preparations.

54

- Classified as carcinogenic (R40, R45, R49) - Harmful to the reproductive system (R60, R61, R62, R63) - Mutagenic (R46, R68) - Toxic (R23, R24, R25, R26, R27, R28, R51) - Allergen inhalation (R42) or harmful to the environment (R50, R50/53, R51/53, R52 R52/53, R53) - Cause heritable genetic damage (R46) - Danger of serious damage to health by prolonged exposure (R48) - Possible risk of irreversible effects (R68).

• Phthalates, used for coating wood, plastic or metal parts and subject to any of the following warning statements: R60, R61, R62 in accordance with

Directive no. 67/548/EEC and its amendments shall not include: - More than 5% by weight of volatile organic compounds (VOCs), - Aziridinyl, - Chromium (VI) compounds

• Adhesives or glues used in furniture construction may not contain more than 10% by weight of volatile organic compounds.

• The packaging must be: - From a material that can be easily recycled, or - From materials based on renewable resources, or - Suitable for repeated use. From the International Trade Centre the products sector export packaging requirements

The product profile on wooden furniture and furniture made of similar natural raw materials (bamboo, rattan, etc.) prepared as part of a Packaging Kit aimed at small and medium enterprises in developing countries - covers product characteristics, distribution channels, export quality requirements and standards; reviews the world supply, demand, and international trade; outlines the types and standards of packaging used for the export of various products within the sector; highlights import regulations with regard to packaging and labelling, in Europe, USA, Japan, and Canada; includes a list of relevant bibliographical references and Web resources; the appendices include an example of a furniture distribution mode, lists of ISO, European, American, Japanese and German furniture standard.

11.9 Customs documentation and formalities

COMBINED NOMENCLATURE AND CUSTOM RATE APPRAISAL Giving its type, i.e. its structure, technical characteristics and the purpose of use. The EU applies a combined nomenclature that gives a detailed classification of a globally recognized, harmonized system of nomenclature and tariff denominations. Custom duties, as well as other

55

measures of trade policy therefore depend on the classification of goods in the combined nomenclature. The customs bodies may, in relation to a specific request and on the basis, as well as on the basis of meeting certain requirements, issue binding information on the classification of goods in the combined nomenclature. CUSTOMS VALUE The basic rule is that the customs value, verified on the basis of the invoice value submitted to the customs bodies, results from the actual value of the goods purchased in order to be imported into the country. SUBMISSION OF A CUSTOMS DECLARATION For a particular customs procedure, a customs declaration, as the most common form for the customs-approved treatment or use of goods, must be submitted. The customs declarant submits the custom declaration and the goods to the customs body. The customs declarant may submit their customs declaration in any EU state where they will be treated equally. The customs declaration may be submitted in writing, in the form of the computer data exchange system, or by an act whereby the person holding the goods in their possession expresses their readiness to submit those goods to the customs procedure (the conclusive act), if such a possibility is envisaged by the EU’s regulations. The customs declaration must contain all the data needed to conduct the customs procedure and must be accompanied by all the documents required for the procedure for which the goods are declared. Since 1 January 2011 all traders involved in customs transactions and international logistics must make an electronic declaration to the Customs providing security data on goods before these goods are brought into, or out of, the European Union. The type of security data requested from traders varies according to the means of transport and the reliability of the traders involved in the operation. In import procedures a written customs declaration, as the most important form, is submitted in a single administrative document (“SAD”, Slovenian abbreviation, EUL).

11.10 Special import regimes, where applicable: customs facilities, imports on the consignment basis, drawback, and temporary admission and transit goods.

TEMPORARY IMPORT: The definition of temporary import = most commonly when the goods are received in the third country processing in the EU (under the inward processing). The entry of goods, from third countries is for processing purposes, after 57 / 1 VAT-exempt from a VAT return.

56

1. The following transactions are exempt from VAT: a) The supply of goods to the customs authority and in accordance with customs regulations in temporary storage; b) The supply of goods under the customs rules in a free zone or free warehouse; c) The supply of goods which are in accordance with customs regulations shall be exempt from customs warehousing or the inward processing procedure. 2. The services associated with the supply of goods under the first paragraph of this article. 3. The supply of goods in the first paragraph of this article in the free zones, free and bonded warehouses and supplies of these goods, but only as long as the goods in a free zone or free warehouse or the customs warehousing procedure is in accordance with customs regulations. The temporary importation procedure enables unchanged non-community goods (i.e. the only change occurs due to its use) intended for re-exportation to be used in the EU’s customs territory to be fully or partly relieved of import duties without being the subject of trade policy measures. A temporary importation permit is issued to a person who uses the goods or disposes of them for the use of others. The custom bodies determine the time frame within which the imported goods must be exported or re-exported or must obtain a new, customs-approved treatment or use. This time frame must be long enough to allow for the objective of the permitted use to be achieved. The longest permitted time frame within which goods may remain in the temporary importation procedure is 24 months, while the customs bodies may also determine, in agreement with the party in question, a shorter time frame. The customs bodies may, at the request of the given party, prolong the time frame in order to enable the use of the goods if it is justified by extraordinary circumstances. For goods that do not meet the requirements of a temporary importation permit with a full exemption from import duties, the customs body may approve a temporary importation procedure with a partial exemption from import duties. In such a case, the import duty amounts to 3% of the duty payable for that type of goods if it is released for free circulation, for each month of the temporary importation. There is a table of goods for which a temporary importation procedure with a partial exemption from import duties may not be approved. CONSIGNMENTS BEFORE CUSTOMS BODIES Consignments are treated by customs bodies according to the national Act Implementing the Customs Regulations of the European Community. A customer in the customs procedure may authorize a consignee to represent them before a customs bodies. The consignee must fulfil the certain conditions (educational degree, state examination), in order for the General Customs Service to issue them the consignment permit. IMPORTATION OF GOODS INTO THE EU CUSTOMS TERRITORY All goods under customs control that are imported into the EU's customs territory must be submitted to a customs authority so that it may determine their status, i.e. whether it is community or non-community goods. Goods received for a transit procedure prior to

57

importations into the EU's customs territory are not subject to all the measures prescribed for the importing of goods to the EU's customs territory. For non-community goods, a summary declaration must be submitted on a special form so that the customs body can conduct the customs procedure. If the request is immediately submitted for the customs-approved treatment or use of goods, the recipient of such goods or the person who has them at their disposal may request temporary warehousing for those goods. Such temporary warehousing may last for 20 days and, with seaborne trade, for 45 days. Upon expiry of the deadline for temporary warehousing, the person who has temporarily kept the goods must request the approved treatment or use of the goods, i.e. the re-exporting of the goods. EXTERNAL TRANSIT The external transit procedure enables the circulation of non-community goods from one part of the EU’s customs territory to another, without being subjected to the payment of import or other duties or any other measures of trade policy. The external transit procedure is applied to the export of goods to the EU for which exports incentives are paid or will be paid. The external transit procedure is realized with:

- A transit-custom declaration submitted via electronic data exchange - When this is not possible and in exceptional cases a written transit declaration (EUL),

and - A TIR carnet, ATA carnet and other such documents

Goods must be submitted to the customs authority which controls the shipment and determines the time frame for transit. Goods must be submitted to the customs authority at the destination where the transit procedure is completed.

12. STRUCTURE OF COMMERCIALIZATION

12.1 Distribution channels – general considerations

Consumers can choose which distribution channels best suit them. Distribution channels have to be complementary. Some non-sales activity may be transferred to cheaper channels, such as the internet, which serves to support the main sales activities. The most popular distribution channels in Slovenia are: the internet, telemarketing, social network, sales representatives, trade fairs, direct mail, catalogues, and television. Internet

All of the furniture companies in Slovenia have a website, which offers information about the company, the products they offer, their benefits, and any additional services. Their contacts and the locations of their stores and outlets can be found. They might give a special discount if a customer places an order over the internet.

58

Telemarketing

Telemarketing is a support channel for direct mail to their customers. Callers at a telephone centre call a potential customer to check if he or she has received direct mail or a promotional flyer. They present the company’s offer and try to convince the potential customer to make a purchase. This is a very direct marketing, which has its own advantages and disadvantages. This type of sale is not pleasant and many consumers refuse to take the call. The advantage is that it gives the buyer who hasn’t previously heard of the company, the opportunity to learn something about the company and what it has to offer. Social network

This is a perfect channel for young customers. Companies interact with customers via Facebook and Twitter. Customers share complaints, compliments, and questions with the community and friends who have joined this site. For specific questions the company provides the answers. Social pages are useful when the company participates actively. The downside of this method is that it engages only part of the potential customer.

Sales representatives

Sales representatives have a difficult job since they have to keep their regular customers and search for new ones. Sales representatives need to worry about customer service, whether clients are satisfied with the products, agree to the terms of payment, and offer specific benefits for good customers. They work in company stores, in the company itself or in the field. Shops

Large furniture companies in Slovenia have their own shops in all major towns with their own trained staff. Some small businesses, small manufacturing firms or importing companies display and sell their products in larger shopping centres where they share the same premises. Catalogues

Every furniture company should have one to give to customers. Catalogues can be offered at the stores, sent to the customer’s home and be used as promotional material at different events. It depends on the standard of service. They may be printed on better paper and be of a higher quality, if the furniture is at a higher price level. High quality catalogues are used especially for attracting demanding buyers.

Television

Companies can create TV advertisements with the help of advertising agencies. Advertising agencies know very well what the market expects and how consumers react to advertisements. The effectiveness depends on what time of the day the company advertises and tries to capture consumers and how much money the company is prepared to spend for advertising on TV.

59

12.2 Recommended channels for the distribution of Brazilian products

Before a company enters the Slovenian market, it must inform consumers about what it has to offer. In case of cooperation a Slovene company can take over the introduction of the offer. A new arrival on the market could be announced using big posters which offer an opening discount. All this must be consistent with the style and design of the furniture which the company has to offer. Advertising through different channels must be linked together as a whole. The Brazilian company operating in Slovenia as an independent company must have its own website or can ask an existing Slovenian company to include their offer on their homepage. A catalogue is also a must and should contain pictures of the furniture and some descriptions about materials, design, wood, and stores that offer the furniture. If the Brazilian company can afford to have its own sales-staff, familiar with the product, this presents added value. To summarise, a well thought through advertisement is necessary before entering the Slovenian market. This gives the consumers the opportunity the get familiarized with the brand name and can stir interest among potential customers. In case a Brazilian company wants to transfer its whole business to Slovenia it is preferable to open its own shop, print catalogues and open its own web site. Also suitable for placing a new product onto the market is by using sales representatives or to work with an experienced agent for Brazilian furniture.

12.3 Sales promotion and the advertising structure

In Slovenia companies follow this model of sales promotion and the advertising structure. Companies decide which pars of this model are the most interesting for them. Suggestions for Brazilian companies are described in general comments. The marketing plan should be presented to the marketing staff within the company. The environment in which Slovenians do business must be defined as well as target segments and their characteristics, and the ways products are marketed and presented. The conditions of the sale should be known as well as the ways in which products are distributed. As mentioned in the preceding paragraph, it is important that the company presents the new products before they actually appear in the stores. Public relations in inter organizational marketing is indispensable, but also a very effective tool for communication. On the one hand you can make an important contribution to the promotion of an individual image (development and innovation functions in the company, the entire company and its representatives, law, government bodies and representatives, chambers and others) to the broad general public. You can also represent and promote the product, its technology, design, innovation and other narrowly targeted benefits in professional segments. In addition public relations present an interesting form of communication with the wider public since its primary role is to communicate with the media through press releases. Unpaid information gives greater credibility, a wider outreach and more efficiency – consumers are more likely to support products, people, companies, etc.

60

Written tools: survey sheets, questionnaires, letters, flyers, newsletters, newspapers, magazines, brochures, prospectuses, annual reports, presentations, publications, monographs, press releases, news, notices, articles, interviews, reportage, commentaries… Verbal tools: speeches, interviews, conferences, briefings, TV programmes, meetings, visits, seminars, workshops... Audiovisual tools: photography, film, video, illustration, exhibition, projection, lighting and other boards... New media: video conferencing, video magazine, e-mail, databases, CD-ROM, information kiosks, computer networks, the internet... Advertising in newspapers, television, radio or other media is usually not cheap. Advertisements are seen by a large number of people, but only rarely do they focus on a narrow target audience and its effects are difficult to measure. Therefore, companies choose types of communication with consumers which are more closely linked to the defined target audience such as advertising at fairs or other events targeted at a specific product (for example furniture fairs).

Tools and techniques of advertising

- Advertisements in print media (newspapers, magazines, newsletters, bulletins, brochures), - Radio ads in the media (national, regional, commercial, local, internal radio) - TV ads in the media (global, regional, national, commercial, cable networks) - Outdoor advertising (billboards and other posters, flyers, banners, flags), - Ads in the new electronic media (e-mail, computer information networks, videotext, internet) Sales promotions are instruments that bring the product closer to the target segment, so you are physically present in the public. On this occasion the product and its properties say more and in a more convincing way than advertising. Sales promotion tools often provide a personal contact between providers and customers and the presentation of other marketing tools. For inter organizational marketing, sales promotion tools are also very popular due to the higher range of potential customers. Being present at major fairs is also very important.

Sales promotion tools

- For retail trade: regulation of shop windows and racks with shelves, displays, labels with prices and discounts, packages, bonus coupons, samples, catalogues, tastings ... - For sales staff awards, literature, direct mail, gifts, training, and competitions - For customers: fairs, exhibitions, demonstrations, seminars, conferences, mobile exhibitions, teams, gifts, publications...

61

Personal communication is the most successful inter-organizational marketing. Of course, it takes time, and the costs are high, but their ultimate effect is acceptable. Personal communication is carried out, when we are more accessible to a user with the information.

Personal communication tools

- Direct communication: conversation, visits, acquisitions, selling from door to door, demonstrations, training, seminars, entertainment, telephone, teleconferencing... - Indirect communication: direct mail, letters, facsimile, electronic mail, the internet... - Resources to support personal communication: brochures, catalogues, brochures, CDs, videos, slides, photographs, films, audio tapes, business gifts...

12.4 Fairs and exhibitions

When Slovenians think about a fair it is necessary to bear in mind that the plan of exhibitions and fairs necessarily results from the marketing plan and the marketing communication plan on a specific market - and not vice versa! A good idea is that before starting the preparatory work for an exhibition to place concrete, measurable quantitative targets. This is important for the design of individual tools of communication, so that they are effective. But also because of the leadership, ourselves and other staff at the exhibition compel behaviour that is consistent with the objectives. Quantitative targets may be different: the number of contacts with visitors at the stand, the number of contacts with potential importers or agents, the number of serious discussions on the sale of products, the number of meetings that will soon occur after the fair with people asking for information, the number of contacts that already in a short time after the fair have resulted in the sale of products, the number of orders from permanent customers, the number of new orders and contracts acquired at the fair, the turnover value of the products sold at the fair, the number of personally distributed brochures, catalogues, samples, the number of distributed corporate gifts, the number of participants at the demonstrations, presentations, conferences, the number of articles, notices, documentaries, in the media, which will be published, the number of important (VIP), visitors, journalists and others, the number of competitors who will visit our exhibition stand, the number of seminars which will be visited and many others. Given the communication goals Slovenians have set us in a specific market, Slovenian companies will determine all the other tools of communication, which will be used to achieve these goals. Slovenians will draw up a communication network. Inviting visitors can take place through a targeted mailing, or for this purpose we could use other forms: advertising, public relations media, publications offered by the organizer of the fair or exhibition. Even outdoor advertising can attract the attention of potential visitors. Brochures and other informational materials will help us in providing permanent and in-depth information to

62

interested visitors. For the exhibition and for each of the other communication tools selected Slovenians need to make a time and financial plan. Every year Slovenia has a Furniture Fair, organized by Ambient Ljubljana. The fair takes place at the Ljubljana Exhibition Centre and is the largest exhibition of interior design with the latest trends in Slovenia. The fair allows greater personal contact with vendors and customers. Other important fairs in Europe are: • German IMM Cologne Messe, which is held annually in Cologne in January. • Italian Salone Internazionale of Mobile, which takes place every year in Milan in April.

12.5 Marketing assistance

In Slovenia you can organize part of your marketing through outsourcing. For example, an external agency can create a website, prepare a catalogue to your liking, prepare a television campaign, and take care of customer contacts, or an advertising agency could develop promotional material for you. The company’s marketing and sales staff needs to know who they want the marketing to reach, who their target customers are, which segments their customers are in and what they want to achieve. They should design a pricing strategy, have good knowledge and be able to describe the company’s products; know which marketing channels Slovenia has to offer and how to communicate with customers. If the decision for advertising has been accepted then advertising agencies will also create an effective ad campaign. The most popular ad agencies in Slovenia are Publicis, Pan, Futura DDB, Eksit. The website may be developed by the agency itself or sub-contracted through the student service that offers competitive rates for students, who will deal with the web design and who possess the appropriate knowledge and skills.

13. COMMERCIAL PRACTICES

In international business, companies should be aware of and take into account the cultural diversity of individual countries. If businessmen do not understand the culture of business partners they may not understand business contracts. It requires knowledge of the language (English is most commonly used when doing business with foreign partners), religion, gender roles, and a sense of humour, values and behaviours of individuals. Knowledge of cultural differences gives negotiators a great advantage in doing business.

63

13.1 Local negotiation habits

Slovenes take negotiations too easily. Negotiations usually include five phases: deciding on the negotiation, preparation for the negotiation, the negotiation, continuation or persuasion of negotiations and conclusion of negotiations. Slovenes are less prepared to negotiate; they lack knowledge and negotiating skills. Slovenian negotiators usually do not function optimally in negotiating groups; they are sensitive, argumentative and resentful. Negotiators expect that they will have agreed programme or content of the negotiations. Slovenian negotiators are known to be aggressive. For Slovenia individual negotiations are typical which makes it difficult to make compromises and arrangements. They lack persistence and patience. Slovenians also lack negotiating courage, are not willing to take risks and are often very guarded.

13.2 Use of catalogues and samples

Using furniture catalogues can be implemented in many ways. Many companies offer their catalogues in the stores. Other campaigns are based on various consumer catalogues sent to your home. However, these are mainly the cheaper catalogues. Some providers of furniture offer instructions on their website on how to obtain their consumer catalogue. Companies sometimes offer their catalogues in electronic form on their website, so that the consumer can view the whole offer. In some catalogues companies just present their products, in other catalogues some companies also include the prices of their furniture. Shops usually display individual samples where the customer can test them and view the furniture. The selection includes some of the cheapest and different samples. Companies may also provide some small samples of materials so that the customers can better see the colour and type of furniture. If the customer decides to purchase furniture, exhibition furniture has a lower price. Some companies offer the possibility of the reduced prices in sales of its furniture twice on year.

13.3 Visits or other forms of contacts

Typically consumers visit shops to see what is on offer and the staff offer them assistance. Sales staff prepares an offer (including drawings and prices for individual furniture elements), advise them and help them with information about the furniture (size, material etc.). If a company participates in a business to business relationship it is required that the sales representatives visit them. In this way they can agree on the desirability of the furniture, negotiate the price and determine the period of the acquisition and payment. Some furniture companies and stores offer staff visits to a customer’s homes to measure the space in which new furniture will be placed. In this way the sales person can advise on the colour of the furniture, on the elements that coincide with the available space, take an order and the customer can agree on the method of payment.

64

13.4 Importing contracts’ general conditions

Delivery times vary from one company to another. Delivery times for furniture in Slovenia range from 21 to 45 days. It depends on the producer as well as on the level of difficulty of delivery to the customer. An individual contract where the furniture is tailored to the customer’s requirements and differs from the prescribed norms will have a longer delivery time. Making furniture according to order has the longest time of delivery. Due to Slovenia’s small size, international business is essential. Participation in international business is the key to its economic survival. Both exports and imports of goods and services are important. Slovenia imports the goods and services that it cannot produce by itself, in the case when it lacks the natural resources for production or in the case where the production of certain goods is unfeasible. In terms of the factors of integration in the world trade Slovenia can be defined by the following characteristic factors: - Slovenia is a small country and is highly dependent on international trade; - Slovenia's development level, measured by GDP per capita is relatively high; - Geographically, the north and west are surrounded by developed countries; - The geographical concentration of international trade refers to the EU-27, the share of exports to these countries presents 69% and the share of imports nearly 78%.

13.5 Insurance and freight

Large companies generally carry out transport by themselves but smaller businesses often outsource transportation, due to it being more cost-effective. Some providers also offer secure outdoor storage of furniture, for a shorter or longer period. They are usually insured against fire, storage and theft. In addition, the protection is connected to a Security Centre. External contractors who transport the furniture protect your business and it is their responsibility to insure all the transported goods. However, this insurance is limited and it may not repay all the damages. Such damage will be reimbursed in full. Furniture is protected during loading, transport and delivery to home customers.

Furniture companies offer a warranty, which is a kind of insurance. Some companies offer complete protection, other companies offer only partial protection. They offer insurance and guarantee the furniture to be transported home safely, with no damage within the agreed time. Many companies offer a warranty from the date of purchase for a limited time. In case of damage companies can reimburse the consumer or offer them new furniture.

65

13.6 Customs clearance

According to the Customs Administration of the Republic of Slovenia: From the time of introduction into the customs territory of the Community, goods are bonded and may be subjected to controls by the customs authorities. For all goods which cannot be declared orally, it is necessary to be at the border for a declaration of entry for the desired procedure. Clearance of goods can be carried out at the border customs offices, following entry and presentation to the border customs authorities first introduced in the customs transit procedure, to be transported to a place in the customs area of the Community which should be placed in a given customs procedure. If the declarant wishes that non-Community goods are to be released in free circulation, a customs procedure is necessary. In this procedure the declarant is subjected to the formalities concerning the imports of goods, has to pay the import duty and take into account all measures in the trade policy and measures of prohibitions and restrictions. When exposed to the market a customs declaration must be filed electronically. The customs declaration shall be accompanied by all the required documents (e.g. invoice, certificate of origin, import license, transport documents). The goods will be released when the customs fee is paid or secured. The amount of import duty is dependent on the classification of the goods in the combined nomenclature of origin, customs value and quantity. Types of costs when importing:

- customs, - anti-countervailing duty, - additional charges, - value added tax, - compensation benefits, - interest on late payment, - excise duties, - environmental tax on air pollution with CO2 emissions from liquid fuels, - environmental tax on air pollution with CO2 emissions from gaseous fuels, - environmental tax on air pollution with CO2 emissions from solid fuels - environmental tax on pollution caused by the use of lubricating oils and fluids, - environmental tax on pollution caused by the generation of used motor vehicles - tax on motor vehicles, - other forms of special taxes or duties.

Permission to carry out the procedure for processing of imported goods under customs supervision shall be granted only:

- where persons are established in the Community; - where the import goods can be identified in the processed products;

66

- where the goods after processing cannot be economically restored or be returned to the state prior to introduction into the process;

- where the application process cannot result in the circumvention of the effect of rules of origin and quantitative restrictions applicable to imported goods;

- where the necessary conditions for the procedure to help create or maintain the processing in the Community, without adversely affecting the essential interests of Community producers of similar goods are implemented (economic conditions).

13.7 Appointing an importing agent

Clarification of Tax (DURS), no. 4230-477/2010, 30 December 2010 With the Law Amending the Law on Value Added Tax - VAT-1C (Official Gazette RS, no. 85/10) and in this connection with the Rules Amending and the Rules of Implementation of the Law on Value Added Tax (Official Gazette , no. 104/10), among other changes the rights and obligations of taxpayers who import goods into the territory of the Republic of Slovenia under a customs procedure 42nd The following explain the changes and answers to common questions. The purpose of customs procedure 42: With the release of goods for free circulation under the customs procedure 42 non-Community goods are released for free circulation in Slovenia. In doing so, the goods are exempt from VAT and some other duties as importers through tax exempt supply of goods to a consignee in another Member State of the Union. Conditions for exemption of VAT payment: In accordance with the fourth point of the first paragraph of Article 50 of the Law on Value Added Tax - VAT-1 (Official Gazette RS, no. 10/10 - 85/10 and OCT2), imports of goods dispatched or transported from a third territory or third country and imported into a Member State other than a Member State of destination shall be exempt from VAT if the supply of such goods by the importer as defined in the sixth paragraph of Article 76 Article Value Added Tax Act-1 shall be exempt from VAT under the 46th Article Value Added Tax Act-1. New, second paragraph 50 Article-1 VAT Act states that the importation of goods from the fourth item of the first paragraph of that Article shall be exempt from VAT if the imported goods are exempt from the supply in accordance with the first and fourth item of the 46th Article Value Added Tax Act-1, only if the importer at the time of importation shall provide at least the following information to the competent customs authority: a) his/her VAT identification number issued by the tax authority in Slovenia or tax

67

identification number for your tax agent who is liable to pay VAT, issued by the tax authority in Slovenia; b) the VAT identification number of the consignee, which is supplied in accordance with the first item of the 46th paragraph of the Article Value Added Tax Act-1, issued in another Member State, or his/her VAT identification number issued by the Member State in which dispatch or transport of goods ends when the goods are transferred in accordance with the fourth item of the 46th paragraph of the Article Value Added Tax Act-1; c) proof that the imported goods are intended to be transported or dispatched from Slovenia to another Member State. Rules implementing the Law on Value Added Tax - Rules (Official Gazette RS, no. 141/06, 52/07, 120/07, 21/08, 123/08, 105/09, 27/10 and 104/10) in the 80th Article provides that the taxpayer data from points (a) and (b) of the second paragraph of Article 50 Article ZDDV-1 state in the declaration. The proof of point (c) is the appropriate transport document according to the type of transport or other relevant documents, from which must be clearly seen that the destination of the goods in another Member State. Goods released for free circulation under the customs procedure 42 before delivery to another Member State shall not be subject to treatment or processing. Fiscal Agent: In the third article, the Rules provide that a taxable person not established in Slovenia, who is established in another Member State may invoke the exemption from VAT on importation of goods under the second paragraph of the 50th Article ZDDV-1 only if it is identified for VAT purposes in Slovenia or appoint a tax representative. A taxable person not established in Slovenia but with a head office in a third country or third territory is subject to VAT exemption when importing goods in accordance with the second paragraph of 50th Article ZDDV-1 only if it is identified for VAT purposes in Slovenia and the designated fiscal agent for the account satisfies the obligations of VAT. In accordance with the fourth paragraph of the Rules, the tax agent may be a natural or legal person who: - Operates in accordance with paragraph 5 Article Value Added Tax Act-1, - Has a head office or permanent residence in Slovenia and - Is identified for VAT purposes in accordance with the 79th Article Value Added Tax Act-1. The Fiscal Agent on behalf of the taxpayer who is not established in Slovenia and satisfies the obligations of the VAT (prepares and submits VAT returns, prepares and submits

68

recapitulative statements and, in the case of the obligation to pay VAT on the territory of Slovenia defined as a taxpayer). The Fiscal Agent forwards a written authorization of the taxpayer to the competent tax office. This is the one tax office, where the tax agent is signed in the register. An authorization form is located on the website of the Tax Administration. If the same tax representative is appointed by more taxpayers who are not established in Slovenia, a tax representative shall submit to the tax authorities the VAT returns and recapitulative statements for each taxpayer separately. If a taxable person not established in Slovenia, who is established in another Member State appoints a tax representative, the tax representative must indicate the VAT identification number of the person represented (if that person is not identified for VAT purposes in Slovenia indicate the VAT identification number under which the represented person identified for VAT purposes in a Member State of establishment - box 01 DDV-O ) in the DDV-0 form, and determine the tax liability of the person represented and disclose in the tax return for the tax period for which it meets the DDV-O. The Tax Agent inserts form DDV-O on his identification number - box 02 DDV-O. In the field 12, form DDV-0 the tax representative shall enter the value exempt supplies of goods to another Member State. The value in field 12 of the DDV-O is equal to the sum total value of supplies of goods under the customs procedure 42 and 63 (A box 14 of Form DP-O), less any adjustment of the supply of goods under the customs procedure 42 and 63 (the sum of the corrections field B 4 form RP-O) in the fiscal period

13.8 Disputes and commercial arbitration.

The conflicts in business are due to differences of interest and understanding between the buyer and seller. This disparity creates a lot of frustration; the reason for this is the failure to guarantee and other actions detrimental to the buyer. The settlement of disputes is usually settled by the seller and buyer by agreement. If not, they determine:

- Competent court to settle disputes - Court of Arbitration at the Chamber of Commerce and Industry.

The court of justice can appeal to the Supreme Court however arbitration rule can’t be subjected of the complaint. Arbitration means the Institute for Dispute Settlement. e.g. in commercial disputes:

- Permanent arbitration - Ad hoc

69

The Permanent Court of Arbitration in Slovenia is in the Chamber of Commerce and Industry of Slovenia. The Permanent Court of Arbitration at the Chamber of Commerce is a separate and independent arbitration institution working at the CCIS and is the only general institutional arbitration, allowing domestic and international business environment settlement of commercial disputes through arbitration and mediation. Its main function is to provide a comprehensive range of arbitration services in dispute resolution and other forms of alternative dispute resolutions that allow a quick, confidential, professional and economical resolution of disputes by arbitrators and mediators, who are specialists in specific areas. The court of honour at the Chamber of Commerce and Industry of Slovenia is an autonomous and independent body and deals with proceedings of breach of business contracts between companies. The advantages of arbitration before the court are that arbitrators are quick in their decision making. The disadvantages of arbitration: all costs of arbitration need to be paid by the companies - costs are usually higher than in court. Power of arbitral awards: has the same power as the judgement. The decision is final and is enforceable.

13.9 Payment terms (advanced payment, drafts, letters of credit, etc.)

In Slovenia there are usually three common types of payments. Companies accept payment in cash, by credit and debit cards and by instalments. The larger the number of credit cards the company accepts, the better it is for attracting buyers.

Payment in cash

It is rare for furniture buyers to pay in cash, because typically larger orders are in question and cannot be paid for immediately, even though this would be better for the liquidity of the company. In case of cash payment the customers are awarded and are offered cash discounts. Cash discounts usually range between 10 per cent and 15 per cent. In this way the customer is satisfied, also, the company can reduce the price of furniture depending on the value of the money received immediately at the time of purchase. Payment by debit and credit cards

This manner of a payment is used by many customers. For payment by debit card, the customer does not pay directly with cash. The company gets paid, when the bank makes the transaction of money. For payment by credit card, the company receives payment, and the bank customer's account is credited. The date of transfer depends on the agreement between the customer and its bank. The company usually receives payment a month later, because of the purchaser’s monthly deferred payment.

70

Payment in instalments

Payment in instalments is different from company to company. Some companies offer to be paid in 12 instalments or less and some even accept up to 24 instalments. The customer specifies the number of instalments in agreement with the seller. Typically, the buyer must pay in instalments that have been previously agreed with their bank. Vendors require evidence of the last three salaries. The necessary documents are their bank account number and a contract with the seller paying in instalments. The interest rate must not be forgotten when paying in instalments, which depends upon the number of instalments the buyer chooses to pay. Some companies set a minimum number of rates.

14. ADDITIONAL COMMENTS REGARDING THE BRAZILIAN PRODUCT S

14.1 General comments

Domestic manufacturers have poor prospects since they produce good quality furniture which is often quite expensive. Companies that sell furniture offer a variety of home producers as well as individual furniture from other countries. Companies/stores that do not produce furniture but only sell it are also looking to import furniture that it is different in design and material to the furniture offered by Slovenian producers. Especially if it is affordable, has a different design and uses different technology. If a Slovenian company decides to sell Brazilian furniture a strong marketing campaign is essential. Consumers must be informed about the new arrival. Given that the furniture is not part of the everyday purchases, consumers need to know the benefits of Brazilian furniture. What is it that Slovenian furniture doesn’t offer and what is better than the domestic product, what makes it different, that the consumer finds attractive. Whatever the price recommended by the manufacturers of furniture, the Brazilian company must calculate the cheapest transportation in Slovenia. Companies need to consider partial production in Brazil and the completion of production in Slovenia. Is it cheaper to have the production in Slovenia or in Brazil? In setting prices this is taken into account, that the imports cover all the costs with customs, labour, manufacturing, transportation, in a way that companies can operate with a profit. Whatever the case, it is necessary to know the needs of the customers; what they want and what initiates their decision to purchase. For price-sensitivity plays an important role in deciding the price for young people and for older people, who have a higher education and a good salary can afford the price for advanced features and consequently a higher price of the furniture. A company shall upon entry into Slovenia, define what will differentiate it and make it become interesting for consumers. It is difficult to cover and satisfy all segments. Brazilian companies which export furniture to Slovenia have to rely on Slovenian sellers. It is very important that these sellers are educated and familiar with the method of production of

71

Brazilian furniture, wood and materials that are used and other benefits to persuade retailers and give consumers advice. Domestic retailers have the advantage of understanding the purchasing behaviour of Slovenes. Regardless of who will sell the furniture, consumers appreciate a friendly attitude when being given advice, confidence and excellent service. Service plays an important role before the purchase, it is necessary to ensure that the client is offered assistance, given professional advice and shown kindness in the stage before the purchase and monitoring the customers’ satisfaction can play an important role in the future business development, as well as keeping to the agreed delivery time of furniture, its installation and warranty.

14.2 Advantages and disadvantages

The benefit of Brazilian furniture is the different design of the furniture. Different materials and colours could be attractive to the Slovenian consumers. The advantage is definitely the different technology and perhaps a higher quality product for the same price as domestic production. Consumers in Slovenia also have no prior experience with it (positive or negative) and might therefore be ready to try something new. On the other hand consumers might not trust the new product. The disadvantage may also be more expensive transportation costs and therefore higher price.

14.3 Other relevant aspects, including suggestions on how to enhance the Brazilian product’s competitiveness

Competition in the furniture industry enhances the technically advanced products. Consumers are becoming increasingly attentive to the ecology, nature conservation and are becoming more eco-conscious. With different ISO standards, companies wish to increase their quality and companies want to become more competitive. The competitive advantage is the availability of services, the rapid response to complaints, kindness and professional competence. In addition, it is also important that suppliers listen to their customers, and that their views are communicated so that in this way they can better adapt to their wishes. The more a company adapts to its customers, the greater its competitive advantage.

15. COOPERATION OPPORTUNITIES WITH BRAZILIAN COMPANIES

Branches of foreign companies can operate in Slovenia on behalf of the parent company. The wishes of Slovenian companies to collaborate with Brazilian companies are not known. But this doesn’t exclude possibilities of cooperation through joint ventures, partnerships or branches. Joint stock company

72

A joint-stock company is a corporation in which the share capital is divided into shares. The joint-stock company is liable with all its assets for its obligations, whereas the shareholders are not liable for the joint-stock company’s obligations. Joint-stock companies are legal persons that obtain such a status upon court registration. The name of the company must contain the abbreviation d.d. The joint-stock company may be established by one or more domestic or foreign, legal or natural persons by signing the act of incorporation. The minimum founding capital is €25,000. Contributions may be in cash or in kind. At least one-third of the founding capital must be contributed in cash. At least 25 per cent of the nominal value of the shares payable in cash must be paid before registration. Contributions in kind must be made in full before registration. Shares are security. The minimum face value of a share is €1. Any higher face value of a share must be denominated in multiples of €1. Shares can be par value or non-par value shares. Shares can be bearer shares or registered shares. Registered shares must be issued if the nominal value has not been fully paid up. In respect of rights, shares may be ordinary shares or preference shares. Ordinary shares give their owner the right to vote, the right to part of the profit and the right to the corresponding part of the assets after the company’s liquidation or bankruptcy. Preference shares give, in addition to the rights referred to above, certain priorities (such as a fixed dividend, priority in payment upon liquidation). The issue of preference shares must be stipulated by the company’s by-laws. Multiple-voting shares are not permitted. Non-voting shares are not permitted, except with the preferred shares in which case they cannot exceed 50 per cent of the capital of the company. Branch

Foreign companies and foreign sole traders must conduct their business activities through a branch registered in Slovenia. The branch has no legal personality, but it may perform all business activities the parent company may perform. The branch performs its business activities in the name and on behalf of the parent company. The name and address of the parent company must be used in business transactions. The parent company is liable for all obligations of the branch. Company law states that provisions concerning registered names, registered offices, economic activities, representations and business secrets also apply to branches. The appointment of a proxy is compulsory although it is not required that the proxy must have a permanent residence in Slovenia. The branch must be registered with a competent court in Slovenia through a notary. There are no longer any legal restrictions on the registering of branches since the legal requirement that undertakings from non EEA countries may only establish a branch in Slovenia after being registered in their own country for at least two years was abolished in June 2009. An application for court registration must state the branch’s activities, its proxy and must be accompanied by:

73

- A copy of the registration of the parent company,

- The decision of the managing body on establishing the branch, - A notarized copy of the Articles of Associations

- Verified business report of the last business year of the parent company in short term.

The branches of foreign companies have to submit annual reports. The law distinguishes between the branches of EU companies and those of third-country companies. A branch of an EU Company can submit the annual report of its parent company provided that it has been prepared in compliance with the legislation of an EU country. According to amendments to the Companies Act, a branch of a third-country company can submit the annual report of its parent company only if the report was prepared in compliance with EU Directives 76/660/EEC and 83/349/EEC. Otherwise, the branch will have to produce and publish its own annual report prepared in accordance with these requirements.

16. ASSOCIATIONS AND FEDERATIONS

Customs documentation and formalities

For further information the Brazilian company could contact a gentleman from the customs office of the Republic of Slovenia, Mr. Ivan Majcen - Ivan.Majcen@gov.si

Restriction regarding imports duties, quotas, etc.

A contact number from Slovenia is Mr. Marko Valant + 386 (0)4 297 4486 (tar.9403890010) BR

Focal point of the WTO / TBT for standard and technical regulations

INMETRO Rua Santa Alexandrina, 416 – 5°, 20261-232 Rio de Janeiro Tel.: +55 21 2563 28 21 Fax: +55 21 2502 65 42 E-mail: barreirastecnicas@inmetro.gov.br Web page: http://www.inmetro.gov.br/english/international/ Import licenses

• Some products are subject to import quotas or special requirements of lists of products which are necessary to obtain an import license it isn’t public, but accessible only to authorized users. • Cleaning fluids, pesticides and batteries are subjected to special controls and limits.

74

Import licenses granted The Secretariat of Foreign Trade (Secretaria de Comercio Exterior, MDIC / Secex) http://www.mdic.gov.br/sitio/interna/index.php?area=5 Directory of exporters and importers

Brazil has an online register of exporters and importers SISCOMEX, in which it is necessary to enter before the start of exports (must be logged on all exporters and importers). http://www.receita.fazenda.gov.br/Principal/Ingles/Versao2/default.asp http://www.receita.fazenda.gov.br/legislacao/legisassunto/siscomex.htm Import duties For the calculation of import taxes to Brazil go to http://thebrazilbusiness.com/import-tax-guide or www.receita.fazenda.gov.br/default.asp

Standards and certification The national standards body Associação Brasileira de the Normas Technicas (ABNT)

http://www.abnt.org.br/

Responsible for certification by the Office for Metrology (in the Slovenian language – “meroslovje”), normalization and quality of the industry (CONMETRO) http://www.inmetro.gov.br/english/index.asp http://www.inmetro.gov.br/inmetro/conmetro.asp

Useful information about doing business in Brazil The Brazilian National Confederation of Industries CNI www.cni.org.br/english/ sac@cni.org.br